aurora
Business Writer
Early indications are that many firms will struggle to pay April salaries as they are generating little or no income during the 21-day lockdown period, president of the Employers’ Confederation of Zimbabwe (EMCOZ) Dr Israel Murefu has said.
Labour has, however, called for dialogue with Zimbabwe Congress of Trade Unions (ZCTU) president Peter Mutasa saying there is need for the Tripartite Negotiating Forum (TNF) to meet and discuss how best to handle the situation.
A retrenchment freeze might be necessary, according to the labour body.
The coronavirus pandemic, and the subsequent lockdown, has meant many businesses, essential or non-essential, are not generating enough revenues to meet their costs, including labour costs.
Hotelier, Rainbow Tourism Group (RTG), said the lockdown period will cost it 6 percent of its annual revenue, while retailer OK Zimbabwe saw a significant drop in revenue with more than six stores completely closed while others have reduced trading hours.
Some firms have already come out into the open, informing their employees that salaries will not be paid out as normally expected.
In a memorandum to its employees seen by Business Weekly, hospitality group African Sun said it will only be able to pay 50 percent for the months of April and May 2020.
The company said it had “lost business long before the Ministerial Public Health (Covid-19 Presidential Containment and Treatment) (National Lockdown) Order, 2020 — SI 83 of 2020, and has not been generating revenue since then.
This difficult season is expected to last for a while, it said.
Some firms, such as ZSE-listed Simbisa Brands, went as far as laying off contract workers, putting employees on leave and freezing acting appointments, among other cost-cutting measures.
A snap survey conducted by the Confederation of Zimbabwe Industries (CZI) shows that at least 16 percent of the surveyed firms stated that they have sent employees on unpaid leave. Dr Murefu highlighted some of the businesses likely to be hardest hit by the pandemic-induced loss of business.
“The hospitality and tourism industry is literally shut down and is generating zero income. It is going to struggle as long as the world is on shutdown and borders closed.
“The SMEs sector survives on hand-to-mouth as they have limited access to bank credit or loans. They will again struggle to open as they have little or no accumulated capital,” he said.
If the coronavirus-induced revenue loss persists as it is now for any extended period many businesses will not be able to pay beyond this month, according to Dr Murefu.
He said there is need for some kind of accommodation to enable businesses to operate without compromising any risk mitigation measures against Covid-19 so that they can generate some cash flow to meet operational obligations including wages.
“Without that and in the absence of any rescue package, many businesses will fail to pay salaries and may even fail to resume operations going forward.”
Market watchers are of the opinion that the Government is not in a position to offer any kind of rescue package.
“Government is operating on a shoe-string budget and will not offer much in terms of a rescue package. Remember before this, the country has been struggling to meet some of its obligations such as maize imports, a result of two consecutive droughts. Doctors and nurses went on strike several times and are still aggrieved in terms of their remunerations, so chances of a bailout are out of question,” said Walter Mandeya of Trigrams Investments.
An external bailout package is also out of question as Zimbabwe, because of its long time debt overhang and the United States-induced sanctions, is not eligible.
ZCTU’s Mutasa suggests that the “only way out is social dialogue” without Government going it alone which then creates or perpetuates a crisis.
He said Government will have to jump in, and come up with a stimulus package for business, SMEs in particular, that might fail to resume operations.
In a position paper on the impact of Covid-19 on workers, ZCTU said “there is need to protect direct and indirectly affected workers by adopting a moratorium or freeze on retrenchments during the lockdown or slowdown in business activity as such retrenchments would further contribute to socio-economic dislocations”.
The labour representative body said access to a Government stimulus package “should be conditional mainly based on guarantees for job preservation”.
Bongani Ndlovu