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Paul Karanda Economic Focus
THE employment relationship is one that is contractual and the expectations from both parties to the contract are usually spelt out.
The issue of wages is part and parcel of the contract. The need to review parts of the contract from time to time is necessary for the attainment of organisational objectives.
Wages are, however, different in that there are provisions for the reviews at specific intervals in the case of NECs (National Employment Councils) graded employees in Zimbabwe.
Organisations in the private sector in Zimbabwe review wages annually as provided for in the Labour Act Chapter 28:01.
This year was therefore no exception. Wages negotiated across industries in 2014 form the basis for this article.
Collective Bargaining Agreements concluded and registered with the Ministry of Public Service, Labour and Social Welfare for the year 2014 as at 31 October stood at 23 with two industries having gone to the Labour Court — one industry before an arbitrator and two other industries deadlocked.
A total of 28 industries had their positions known by the ministry as at 31 October 2014.
In 2013 the highest award was 61,02 percent with the lowest registered by the ministry settling at 4,5 percent.
This year, the highest increase agreed on was 14,03 percent, a sharp decrease of about 77 percent.
The lowest increase was for 0,82 percent down from 4,5 percent the previous year a decrease of about 82 percent.
The number of registered awards may go up this year to 28 from 23 in 2013. Five industries were reported not to be functional in 2014, these being the motor vehicle manufacturing, grain milling, glass manufacturing, rubber and allied and the pulp and paper.
In different sectors different arguments were presented for and against increases. The most common arguments that were presented by the unions were that the prevailing wage was not a living wage.
The poverty datum line was referenced as a measure /barometer where negotiations should end.
It was also argued that the Government had set a very good example for all, by agreeing with public service unions on a salary deal that was pegged against the poverty datum line, at three quarters of the (PDL).
Most unions supported their arguments by providing latest breakdowns of requirements for a month for a family of six.
The arguments were further explained as having a bearing on productivity and morale boosting.
The unions argued that happy workers produce more. Unions generally admitted that organisations were not doing well in some industries but were of the belief that employers’ organisations were exaggerating the extent to which industries and companies were affected by the economic slowdown.
It was argued that the continued entry by new companies into some industries was a sign that the industries were profitable and that there was still room to pay more in those industries.
Most employer organisations introduced 2014 wage reviews anchored on fundamentals that in their view needed to become the backbone of future wage reviews.
In a 2014 post budget meeting employers argued that wages would need to be reviewed in line with economic fundamentals.
They argued that wages would and could rise when the economic and company performances were rising or improving.
They also suggested that wages should be commensurate with the productivity rate which was measured at 39,6 percent in 2013 a decline of five percent from 44,6 percent the previous year.
The use of productivity as a basis for reviews continued to be a fundamental factor that employers were pushing for recognition by unions across industries. Employers presented the 2013 3,5 percent and 2014 3,1 percent GDP downward reviews as measures of the level of growth and therefore should be mirrored in the final wage review figures.
Employers also cited high costs of production and the high cost of doing business in Zimbabwe to which wages were a factor that contributed among other factors.
Employers warned unions of bargaining their members out of employment. Employers also posited that there was hardly any inflation to talk about and therefore the wages that were agreed on and that made sense in 2013 must prevail.
The issue of affordability was also discussed across the board. There were arguments that were peculiar to specific industries, one such industry was the tourism sector where a proposed tax was said to have a huge impact on the industry.
Pay increases through collective bargaining are known to be influenced by factors that include negotiating strengths and skills of the representatives, cost of living, profitability, labour market forces, company performance and productivity among others.
Employers have always had the dilemma of negotiating pay systems that cater for all categories that come with different and ever-changing business context.
Pay systems need to be flexible to the extent that their variable components could absorb downturns in business and reduce labour costs.
The pay system could have the capability to reduce the incidence of redundancies during times of poor organisational and economic performance.
Other factors that would need to be satisfied include orientation towards better performance in terms of productivity, profit or any performance factor that the organisation rates as a critical success factor.
To enhance high performance the pay system should be able to reward good performance without increasing labour costs as part of total costs through enhanced productivity.
Above all the system should ensure that organisational objectives are attained and that talent can be attracted and retained.
Collective bargaining going forward remains the backbone of wage setting in Zimbabwe.
The prevailing challenges faced by both parties continue to push parties apart. Going into 2015 the economy and organisational performance are factors that will be the bases for continued settlement of this wage issue.
Paul Innocent Karanda is a Human Resources practitioner with a Bulawayo company. He writes in his own capacity and can be contacted by email at [email protected]
Bongani Ndlovu
Online Reporter