About 4 000 Zimbabweans workers were retrenched in 2014, a 40 percent increase in retrenchment figures compared to 2013, as the economy continues to nosedive leading to more companies closing shop, the central bank said.
According to retrenchment statistics compiled by the Retrenchment Board, 3 881 workers lost their jobs compared to the 2 376 recorded in 2013.
“Owing to viability challenges, a significant number of companies resorted to downsizing and restructuring, while some were placed under judicial management and yet others even closing down completely,” the Reserve Bank of Zimbabwe (RBZ) said in the Inflation Report for 2014 released last week.
The central bank also noted the amount of companies laying off employees was leading to a swell in the country’s informal sector.
“This action resulted in extensive job losses in the formal sector, making more turn to the informal sector for subsistence,” the apex bank said.
The RBZ said the economic decline had led to the closure of more companies leading to lower buying power.
“The continued decline in economic activities that manifested in the closure of companies resulted in the reduction of purchasing power in the economy, effectively worsening the already low aggregate demand situation,” the RBZ said.
Chinamasa in his budget also said 4 600 companies had shut down between 2011 and October last year, with 64 000 losing their jobs
However, despite these figures, the country’s biggest workforce — civil servants — were untouched by the retrenchments.
In his 2015 budget statement, Finance minister, Patrick Chinamasa warned that recurrent expenditure would go up to 92 percent this year, the bulk of it going to pay wages for the 235 000 civil servants, with Chinamasa indicating that government was going to cut the workforce this year.
Analysts also believe the figure is understated as most companies could not retrench due to the country’s inflexible labour laws.
“Well as you say yourself, this figure is big, but the economy is not performing so the country must brace for tougher times really,
“Besides, this year’s figures are likely to triple if government amends the labour laws not to mention what will happen if they retrench civil servants as they have promised the International Monetary Fund (IMF),” said Isis Mwale, a local economist.
The IMF also said the country’s economy is expected to further weaken after a 3,1 percent growth in 2014.
The RBZ however, expects inflation to remain subdued for the rest of the year, with projections between -1,5 percent and -0,1 percent.
The mass retrenchments come as the country’s ambitious economic blueprint Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), which was touted as an employment creation mechanism has remained just a document with nothing tangible coming out.
Under ZimAsset, the Zanu PF government targeted to create 2,2 million jobs.