Companies urged to rightsize operations

Following the adoption of a multi-currency regime in February 2009, Zimbabwe’s economy has been on a rebound but due to liquidity crunch and power supply challenges, among others, the country is suffering from economic stagnation.

 

Emcoz executive director Mr John Mufukare told Business Chronicle that due to underperformance of the economy, local firms had resorted to retrenchment with the mining sector the worst affected.

He said the reasons for retrenchments included redundancy, restructuring, downsizing, and viability problems. “The new focus in the current Zimbabwean economic environment is on rightsizing for business sustainability and survival for most of the entities,” he said.

He said in a bid to address the labour market crisis, his organisation recently convened a training workshop on retrenchment.

The training workshop targeted executives responsible for determining rightsizing policies and those that executed the policies.

This was meant to create a common understanding on the processes and procedures in retrenchment.

“This was a long overdue development taking cognisance of the prevailing economic environment which is putting severe stress on the employer-employee relationship, leaving retrenchment as the only alternative left; after all other avenues have been explored,” he said.

Since 2006, companies embarked on massive retrenchments although the trend gradually receded in 2011 to less than 3 100 workers compared to more than 4 000 workers in 2010, which was the peak period.

It was also highlighted that the global economic growth is expected to drop further from 4 percent in 2011 to 3,5 percent this year.

The drop is attributed to deteriorating sovereign debt and banking sector developments in the euro area.

“Real Gross Domestic Product growth in the emerging and developing economies is projected to slow from 6,25 percent to 5,75 percent in 2012.

“The key challenge faced by emerging economies is based on how to create firewalls to minimise the impact. Concerning the Zimbabwean developments, the theme of the 2012 mid-term fiscal policy review sums up the current state of the economy “From Crisis to Austerity: Getting Back to Basics”, Mr Mufukare said.