Covid-19 intensifies Zimbabwe’s jobs bloodbath

ZIMBABWE is shedding jobs at an unprecedented rate due to the country’s long-standing economic crisis and the devastating effects of Covid-19, experts say.

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This comes as the International Labour Organisation (ILO) has also warned that nearly half of the world’s workforce is at risk of losing their jobs due to the global coronavirus pandemic.
The Employers’ Confederation of Zimbabwe (Emcoz) told The Financial Gazette this week that Covid-19 had triggered horrendous job losses in the country — amid fears that the situation would worsen in the coming months if the current national lockdown measures continued for much longer or were escalated.

“Our estimate is that about 20 percent to 30 percent of employees in formal employment outside the civil service either do not enjoy full employment or are redundant one way or the other due to the situation,” Israel Murefu, Emcoz’s president, said.

He added that it would also be very difficult going forward for the country to achieve its pre-lockdown employment levels.
Murefu said the situation had been worsened by the fact that industry capacity utilisation was very low, while disbursements of the government’s $18 billion stimulus package — which was expected to mitigate matters — had still not begun.
“If lockdown restrictions are escalated … the situation could worsen, with prospects of some workers getting their old jobs back becoming remote or unlikely.
“We are better off as an economy allowing businesses to run, but with health and safety measures remaining strong in order to minimise the jobs carnage,” he said further.
Murefu also argued that there was need for the country to put together a bigger stimulus package, and to ensure the expeditious disbursement of the funds before more harm was “visited upon our businesses, and consequently the economy”.
Japhet Moyo, the Zimbabwe Congress of Trade Unions (ZCTU) secretary-general, also said job losses that had been witnessed so far this year had been worse than those of 2015 — which followed the judgment on retrenchments by the country’s late former chief justice, Godfrey Chidyausiku.

“The pandemic has compounded a dire situation already. The labour force survey of 2020 had already said 94 percent of the labour force was in the informal sector even before the lockdown.
“Any further intensification of lockdown restrictions without a plan to hedge against job losses would be a disaster.
“Not many companies will be able to withstand another lockdown at the moment without any stimulus package,” Moyo told The Financial Gazette, adding ruefully that the informal economy — where most jobs had migrated to in recent years — was “mostly closed”.
The Confederation of Zimbabwe Industries (CZI) also said Covid-19 had exacerbated an already existing bad situation of high costs for business.
“Formal employment numbers were already in a tailspin before the advent of Covid-19, which explains the higher level of economic activity in the informal sector at more than 60 percent,” Tafadzwa Bandama, CZI’s chief economist said.

She also said 43 percent of respondents in a recent survey had indicated that staff rationalisation would be deployed to reduce costs, as a result of the pandemic.
“Unemployment will heighten as an estimated one in four formal jobs have been lost. Firms indicated that they will reduce labour costs through the non-renewal of fixed term employment contracts, retrenchment of permanent and temporary employees, sending staff on leave and multi-skilling human resources in view of retrenchments and social distancing requirements,” she added — observing further that the situation was probably worse in the informal sector.
Meanwhile, in its Covid-19 response proposal in April, the Zimbabwe National Chamber of Commerce (ZNCC) also warned that the tourism sector would be the most affected — adding that the industry was expected to shed almost 25 percent of its workforce.
It also identified the manufacturing sector among the industries that would be hardest hit.

Overall, ZNCC also forecasted that 25 percent of permanent formal jobs would be lost, along with 75 percent of all casual or temporary jobs in the reeling formal sector.
Christopher Mugaga, the ZNCC’s chief executive, told The Financial Gazette this week that companies were now even resorting to the retrenchment of interns — which showed how dire the situation had become.
He further urged the government to focus all its energies on stabilising the economy, in order to minimise the worsening carnage.
“We are in such a deep ditch right now that growth is out of reach, but they (the government) should aim for stability,” he said, adding that expediting disbursements of the promised $18 billion stimulus package would also be good.
Mugaga also said the requirements for the stimulus package should be made more friendly to businesses.
“As it stands, the facility strictly requires ‘credit worthiness by banking standards’ — which defeats the purpose of a bailout. They should consider a government guarantee model,” he said.
Mugaga also said allowing the new forex auction system to operate independently, avoiding inflation-stocking subsidies and dealing with the country’s high levels of graft should all become matters of “priority”.

“You will see that their (the government’s) justification for catch-and-release is ‘lack of evidence’, but they expect us to believe that the evidence that warrants the sacking of a minister somehow is not enough for a conviction in the courts,” he said.
On its part, the Zimbabwe Coalition on Debt and Development (Zimcodd) said minimising the jobs bloodbath would require a sector-based recovery strategy “that is focused and deliberate in terms of stimulating production and revenue earnings”.
“The most affected industry is tourism and there must, for example, be a post Covid-19 recovery strategy to address a number of issues — including destination accessibility among other things, if tourism is to recover and become a key economic driver.
“Informed by the need to save jobs, government should enter into deferment arrangements with those companies that demonstrate that the pandemic has affected their normal trading operations, on the strict condition that their current tax affairs are in order.
“Players within the small to medium scale category, especially those within the food and essential services sector, should also be considered for a lower corporate tax bracket in order to minimise the adverse effects of the pandemic,” John Maketo, Zimcodd’s programmes manager, said.
According to a research paper that was published by the economic justice group in March this year — before the onset of the coronavirus pandemic — Zimbabwe required at least US$190 million in bailout packages.
All this comes as extreme poverty in the country is estimated to have risen to as much as 38 percent in 2019, according to the country’s statistics agency. newsdesk@fingaz.co.zw