THE Reserve Bank of Zimbabwe (RBZ) says an amendment of the Labour Act should be expedited to make it affordable for employers to retrench workers in line with labour policy best practice.
This was said by RBZ governor John Mangudya while presenting his first Monetary Policy Statement on Wednesday.
“The current regulations which make it more expensive to retrench than to maintain an employee are not conducive to production neither are they conducive to even contemplate to increase employment,” said Mangudya.
“The current process being undertaken by the government on the amendments to the Labour Act should be expedited for the labour policy to be in sync with best practice which is necessary in order to improve competitiveness in the production of goods and services.”
Zimbabwe businesses have been struggling to remain viable in a repressed economic environment, forcing most to either downsize or close down.
In 2014, the Zimbabwe Congress of Trade Unions said 4 172 people lost their jobs between January and September, but reports indicated that more could have been laid off had employers not been deterred by labour laws that make retrenchment very expensive.
Numerous employers, including the government, have suggested the need to lay off workers to align business’ outturn and profitability with staff resources.
However, some economic analysts warned that the exercise could be counterproductive, especially for the country’s largest employer – the government — since retrenchment costs could prove more expensive than employment costs.