adminAlyson Martens, Matthias Ruziwa HR Isssues
At its 2013 congress, the Confederation of Zimbabwean Industry suggested that the existing labour laws were burdening productivity and industrial competitiveness in Zimbabwe.
CZI proposed; that fixed term contracts be honoured, introduction of a productivity based remuneration system and a standard retrenchment package of one week`s salary for every year worked.
This is what some have understood as the suggestion for Government to introduce “labour market flexibility”. In addition, the 2014 CZI’s manufacturing sector survey has also proved that indeed companies are fretting over the current Labour Act which they say is skewed in favour of employees and again the survey is crying for labour flexibility.
Honourable Minister of Public Service, Labour and Social Welfare, Minister Nicholas Goche was quoted by The Sunday Mail edition of October 5 2014 saying “We have agreed on most of the principles with business and labour representatives. Everyone is agreed on the need for amendments to the Labour Act, but as Government, we flatly refused to agree on the issue of labour flexibility which employers wanted. We said no to labour flexibility because we cannot allow the arbitrary dismissal and casualisation of labour”. The private sector is reeling from the debilitating effects of a liquidity crunch. Some companies have shelved retrenchments plans due to inability to pay termination packages while those that have retrenched are fighting legal battles with employees to get their dues. Thirteen (13) Labour Law Reform Principles were proposed by the Tripartite Negotiating Forum (TNF) and have been sent to cabinet for discussion.
Appeals by business for labour flexibility or protests against it by labour make little sense until the type of flexibility is specified and its trade-off recognised. The term “labour market flexibility” is mentioned frequently in debates on the subject of social change. Some think that it is all about giving employers the exclusive right to fire workers and to reduce wages. These are only part of the possible dimensions of flexibility. Flexibility goes beyond these two aspects and may have positive dimensions that enable labour and business to fit the world of work to their lives in a satisfactory manner. We shall endeavour to share some of the concepts of flexibility dimensions as follows;
a. Organisational flexibility
“A shoe that does not fit is a source of discomfort”. Many organisations in Zimbabwe are failing to adapt to changing circumstances. Organisational flexibility allows the firm to adapt its business strategies to the actors and forces emanating from the business environment.
Executives in organisations must continually scan the environment for emerging problems and opportunities, identify issues that need attention and devise and implement new strategies. The CZI 2014 Manufacturing Sector Survey reported that average capacity utilisation has fallen from 39,6 percent in 2013 to 36,3 percent in 2014 .The survey also reported that labour laws were not flexible when it comes to adjusting wages in relation to productivity. It was difficult to retrench staff where a company failed to sustain its labour costs. The organisation that sees an early decline in demand for a certain product or service can reorient itself quickly having more time to implement internal reallocations and thus reducing the need for numerical flexibility. It is more likely that Zimbabwean organisations are failing to adapt because strategic plans are not reviewed regularly and in some cases after attending long strategic planning workshops in five star hotels, the next thing that happens is that the strategic plan document finds its way into the Executive’s office desk where it starts gathering dust. Some strategic plans also fail due to lack of vision sharing between the executives and their followers.
b. Functional flexibility
This simply entails the organisation’s ability to redefine job tasks. There are some organisations which have changed away from the idea of a ‘defined job’ to a new expectation that multi-skilled/mutli-task employees will shift continuously among different job duties. It is more likely that some organisations are suffering due to limitations on redefining individual jobs. If companies expect skill improvement, success will depend upon the incentives offered to the workers towards acquisition of new skills and on the available training opportunities.
Generic skills are potentially useful to a large number of employees and workers may be prepared to invest in such human capital. However, our current labour market is characterised by job insecurity and employees are unlikely to invest willingly in skills that are specific to a particular employer. If functional flexibility is to be explored in an organisation, there is need for continuity of employment.
c. Numerical flexibility
Numerical flexibility involves none other than the quantity of labour input. Put simply, firms can vary either the number of workers they employ or the number of hours worked by each employee. Section 12D of Zimbabwe’s Labour Act (Chapter 28:01) determines which type of numerical flexibility employers may choose and how they achieve it. In some cases, e.g. Government as an employer practices non-replacement of departing workers but it is indeed a slow process. Lay-off is the traditional method of changing numbers of employees quickly and other options may include non-renewal of short term contracts.
Short time working and reduced hours of operation imply that the same decline in total working hours would be shared by all employees rather than being concentrated on low level workers.
N.B. Too much reliance on numerical flexible may cause an organisation to find it difficult to adapt to new technologies because laid off workers would have drifted to other organisations along with their knowledge and experience and the remaining workers may feel that they have good reason to avoid cooperating in job — destroying technological change.
d. Timing flexibility
This dimension certainly has different social implications. Basically, timing flexibility refers to the ability of the organisation to change when working hours are worked. To meet customer needs, or to maximize the use of expensive capital equipment, firms may want to operate on a regular basis at night, weekends and on holidays. Unfortunately, in some sectors, these types of schedules may not be recognised by labour legislation enshrined in respective National Employment Council collective bargaining agreements.
Scheduling regular shifts with clearly defined hours, even if the hours are ‘odd’ requires a flexible workforce, but this type of flexibility does not allow workers to choose variable hours of work. Timing flexibility may also include changes in work schedules on short notice, at the employer’s discretion but like we have highlighted earlier, it has quite different social implications.
e. Labour cost flexibility
Labour cost flexibility refers to the ability of the organization to adjust at fairly short notice, its average net cost per employment hour. For example, Zimbabwean organisations may vary bonus payments with the organisation’s profits. This can provide flexibility in averaging labour costs. Japanese companies have been able to gain substantial flexibility in average labour costs due to the payment system of variable year end bonuses. This type of flexibility largely depends on employer-employee long term relationships in which bad years can be averaged with good.
In the 1990’s, Canadian companies were able to achieve ‘price stability’ by allowing nominal wages to lag behind inflation. Nevertheless, since cuts in nominal wages of workers are generally strongly resisted and unilateral changes in fringe benefit packages bring their own moral problems, downward flexibility in average real labour costs is now often limited to what can be achieved by limiting overtime that is paid at premium rates.
It is against this backdrop that we encourage government, labour and business to consider other dimensions of flexibility stated above. Just to talk about the freedom of employers to fire workers and the freedom of employers to reduce wages may be viewed as that kind of freedom which does not lead the people of Zimbabwe to higher standards of living.
- Matthias Ruziwa is an experienced and growing Human Resource Practitioner.
- Alyson Martens is an Industrial Psychologist and both are practicing in the Midlands Province, City of Kwekwe. You can contact Matthias or Alyson at the following email addresses:
- [email protected] <mailto:[email protected]> / whatsapp 0773 470 368
- [email protected] <mailto:[email protected]>
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