55000 workers lose jobs in three years

Bianca Mlilo Business Reporter—
A TOTAL of 55 000 workers lost their jobs in the past three years due to various reasons that include lack of financial resources to keep the companies afloat, Parliament has heard. In a report on the operational environment and contribution of the informal sector to the economy, the Parliamentary Portfolio Committee on Small to Medium Enterprises and Cooperative Development (SMECD) said thousands of people have joined the informal economy in the past few years.

Committee chairperson, Dorothy Mangami, said a majority of workers who lost jobs were surviving on the informal economy. “In the last three years 55 000 people have been retrenched following the closure of about 4 000 companies due to a number of factors, which include the lack of financial resources for re-tooling or recapitalisation,” she told Parliament.

The SMEs sector has become a critical pillar in the economy employing close to six million people. However, formalising the sector has become a challenge with players citing exorbitant regulatory costs and cumbersome formalisation processes.

The financial services sector has also not been keen to finance small businesses although some banks have started giving some loans to viable entities. Evidence of the distressing impact of company closures and job losses was initially revealed by Finance and Economic Development Minister Patrick Chinamasa during the presentation of the 2015 national budget. Minister Chinamasa said hundreds of companies closed shop resulting in massive job losses.

The formal job market is down due to company closures and massive job cuts caused by a devastating cash crunch, lack of affordable funding and low capacity utilisation, said the committee. Following the landmark ruling by the Supreme Court last year, which allowed employers to dismiss workers on three months’, the situation worsened as more workers lost their jobs.

The job losses continued into 2016 with the Zimbabwe Congress of Trade Unions (ZCTU) reporting that about 400 workers in the textile and food industries lost their jobs in January alone after several companies failed to open in the new year.