Labour costs exert pressure on businesses

Business Reporter
HIGH labour costs are giving companies in the country a headache amid low domestic demand for local products.
According to the Confederation of Zimbabwe Industries (CZI)’s latest manufacturing survey, labour costs are exerting pressure on businesses whose viability is also under threat.
“A total of 55 percent companies indicated that their wage bill had increased in 2014 compared to 77 percent in 2013. The major reasons cited being wage negotiations at 85 percent and staff recruitment at seven percent,” reads part of the report.

The survey indicates the average labour costs as a percentage of total inputs for the manufacturing sector is pegged at 21 percent while total employee costs as a percentage of total input costs stand at 27 percent.

The survey identifies low demand for local products as a major challenge facing companies more than imports and other production constraints.
“Low local demand for products is 30 percent, working capital constraints 27 percent, competition from imports 14 percent, antiquated machinery and machine breakdowns seven percent, drawbacks from current economic environment seven percent,” reads the report.

High costs of doing business are pegged at seven percent as well as shortage of raw materials.
Companies have however, been urged to invest in human resource development after the survey indicated the only 11 percent of the companies were investing in training and employee development.

“Twenty percent of the companies indicated they did not invest in employee training and development. In terms of safety nets, 12 percent indicated that they fully provided while 36 percent said they did not provide safety nets. In terms of productivity related wages, 36 percent of the companies said wages at their companies were not related to productivity at all while 14 percent said wages were slightly related,” it said.