Employers Opt For Contract Labour, As Economy Bite

The job market is now skewed towards contract labour as more and more employers are failing to cope with the rising costs of doing business compounded by uncertainties of the economy, 263Chat Business has established.

Employers are growing shy of recruiting employees on a permanent basis due to fear of high-cost obligations that come with permanent labour.

Recently, Turnall Holdings revealed it had cut on its permanent workforce for flexibility in quick response to increasing operational costs.

“As in March mining levels were 364 employees and mostly we have skewed towards contract employees, only 165 employees are permanent employees,” Turnall managing director Rose Chisveto told stakeholders at the company’s annual general meeting this week.

“We are just trying to right size the organization, so if we move to contract labour its more flexible whenever we are not quite strong in terms to our response to the market as well as responding to the macro-economic environment. We would be able to quickly make decisions than actually having permanent labour, so it was really a decision to make sure that we are flexible and we are able to respond to the environment whenever there is need,” she added.

This comes amid growing tensions between labour and industry as disposable incomes are being eroded and calls for a minimum wage continue to dominate discourse, a narrative employers are not prepared to risk discussing.

Analysts say, most companies are retrenching their permanent staff then recruit new faces on a three to six months contract agreement, a move pro-labour movements view as exploitation of the labour market.

Some have even resorted to contracting students on industrial learning who are much cheaper to remunerate.

In May, during a ministerial tour of battery manufacturer, Chloride Zimbabwe by deputy minister of Industry and Commerce, Raj Modi, company financial manager Bryton Nyakubereka told 263Chat Business that due to subdued aggregate demand on the market, the firm had slowed down production, contracting employees on six months or less agreement.

“Currently volumes have gone down significantly in terms of sales. We are doing up to 25 000 (batteries), we were doing 32 000, so our demand has shrunk by around 7 000 volumes,” said Nyabereka.

The highly inflationary environment has seen the cost of production scaling upwards and has left many employers with little option but to act on cost containment.

In March, Old Mutual Zimbabwe, the country’s largest integrated financial cooperation by assets and sales offered a retrenchment package to at least 10 percent of its staff.

A month later, Standard Chattered also retrenched close to 100 employees in the country.

Government has not been spared by the biting economic environment, as since last year it had been rationalizing its staff compliment to sustainable levels.

This week President Emmerson Mnangagwa launched the Tripartite Negotiating Forum Act, to pave way for the creation of a platform of social partnership among the government, labour and business to iron out pressing key issues amongst them, labour remuneration and contracts.