Zim’s labour costs too high, says Chinamasa

Tinashe Makichi Harare Bureau
Employees in the private sector should consider coming up with a living wage when determining salary adjustments as opposed to using the poverty datum line has left most companies bleeding from subdued liquidity flows, Finance and Economic Development Minister Patrick Chinamasa.

Addressing delegates yesterday at the Buy Zimbabwe end of year awards 2014 Minister Chinamasa said the labour costs in the country were too high for most companies and there should be a downward revision of the cost structure.

“The cost structure of our companies are not sustainable we cannot compete with other companies within the region. When we migrated from the Zimbabwe dollar the mindset was of hyperinflation, the migration was such that people looked at the United States dollar as equivalent to the inflationary Zim dollar.

“Salaries that were packed in line with the poverty datum line could not match the operations of companies,” said Minister Chinamasa.

“Our labour costs are high for instance, our cost structure has been centered on the poverty datum line of $500 and we are the highest in the region.”

He said for companies to increase their capacities they should start producing quality goods that can compete on the export market.

Minister Chinamasa said companies need to look at a broader market rather than taking Zimbabwe alone as a market.

“Increasing productivity and expanding markets is vital for companies to increase their earnings at the same time correcting their wage structures,” said Minister Chinamasa.

The general feeling among employers is that workers in this country are overpaid; and that their salaries and wages are not in tandem with productivity.

There has been no correlation whatsoever between production and remuneration and this had resulted in most companies bleeding.

Minister Chinamasa however said the economy needs to grow at 8 percent per annum if the country is to realise meaningful economic revival.

He said GDP growth for 2014 was projected at 3,1 percent but the target could not reached due to inherent liquidity shortages in the economy, coupled with low domestic savings, investment inflows and power supply deficits.

Minister Chinamasa said the projected 3,2 percent per annum growth for 2014 is not enough for robust economic revival.

He said a stable macro-economic environment, coupled with planned investments in agriculture, mining, communication and other infrastructural projects, including in power generation and housing, will among others, spur growth, forecast at about 3,2.

Minister Chinamasa said targeted growth rates under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation of around 6 percent will require significant investment, foreign as well as domestic, in infrastructure, new equipment, and machinery and more modern technology.

“Such levels of growth remain inadequate for us to begin making a dent at the prevailing levels of capacity utilisation in the economy and high unemployment.

He said “it remains vital that we further strengthen our efforts towards addressing all the key constraints to rapid economic growth. These relate to improving the ease and cost of doing business in our economy, guaranteeing uninterrupted supply of adequate power, among others.”

Global economic growth is projected at 3.8 percent in 2015, compared to the 3,3 percent in 2014.

The increase in growth will be driven by a rebound in both advanced economies and emerging markets.

In most advanced economies, the pace of economic recovery will be mixed across regions, with average growth of around 2,4 percent in 2015.

Meanwhile, the buy Zimbabwe awards were won by Zimplats, Lobels bread, Econet Wireless, N Richards, CBZ bank, Mimosa mine and National Foods.