adminPREVAILING high wages are pushing away potential investors in labour-intensive industries, a labour expert has said. Industrial Psychology Consultants (Pvt) Ltd managing consultant Memory Nguwi said the effect of compelling companies to pay Poverty Datum Line (PDL)-linked wages had the detrimental effect of making Zimbabwe an unattractive investment destination.
He said the move to link wages to PDL at a time when national income was performing below par was “unprecedented.”
“A high wage economy militates against those investors who are targeting labour intensive industries. Where investors have no option they normally resort to automation to reduce the impact of wages. Where they have options they move to lower wage economies where they can produce competitively.
“In developing countries people aspire for PDL linked wages but it’s not practical considering the levels of productivity. The government’s move to pay minimum wages linked to PDL when government revenue is dwindling is an experiment never seen anywhere in a normal world.”
The country’s National Employment Councils (NECs) have been pushing firms to adjust wages to the PDL, which is around $550 for a family of six.
But industry says this is unrealistic in view of depressed capacity which currently stands at 39,6 percent.
Cooking oil producer Surface Investments chairman Narottam Somani recently said his company cannot afford PDL-adjusted salaries.
“Workers demands $600 per month, while the company cannot even pay $300, and still we are pushed to negotiate.
“Let us not expect the country to afford to pay the highest salaries in Southern Africa. We are now dealing in US dollars,” he said.
However, Reserve Bank of Zimbabwe senior division chief (economic research and policy enhancement) Simon Nyarota told industrialists at a Confederation of Zimbabwe Industries event that it is a misconception to use the PDL for a family of six when negotiating for a minimum wage.
He said it would be appropriate to use the PDL for a single individual which is calculated by the Zimbabwe National Statistical Agency at around $150.
Zimbabwe’s labour market environment is borne out in the level of companies that have embarked on down-sizing exercises.
Official figures from the Ministry of Labour and Social Services indicate that 2,376 workers lost their jobs in 2013 after 165 companies embarked on staff rationalisation programmes.
The numbers show that although retrenchees went down to 2,376 in 2013 from 4,007 in 2012, the number of companies downsizing maintained an upward trend.
Last year 165 companies retrenched their workers compared to 147 companies which retrenched in 2012, as viability challenges persisted. – BH24
Bongani Ndlovu
Online Reporter