Opinion / Blogs
Bearing the brunt: Labour and structural adjustment in Zimbabwe
16 Jul 2011 at 19:40hrs | Views
This article is found in the Southern Africa Report Vol 8, No 5, 1 May 1993, we extracted it from the internet and we think it adds value as to the reason why Zimbabwe is where it is today. Many people talk of the controversial land reform and forget to talk about the controversial economic policies that were seconded to the government by the Bretton Woods Institution.
Below is the article by Sachikonye.
Zimbabwe's economic structural adjustment programme, ESAP, is only half-way through its five year lifespan. But it has already become clear that its impact on the economy, particularly on employment and labour relations, has been far from positive.
In common with the structural adjustment programmes in other African countries, the main objective of Zimbabwe's ESAP ostensibly was to stimulate economic growth, attract foreign investment expand employment and reduce government expenditure through economic liberalization measures.
The measures introduced to reach this principal objective have been the basis of the orthodox package touted by the World Bank and the International Monetary Fund. The package typically prescribes trade liberalization, devaluation, privatization, huge cuts in government spending and social services like education and health and the deregulation of working conditions.
Zimbabwe's ESAP was intended to improve the annual economic growth to five per cent by 1995, up from an average of four per cent in the five year period before the ESAP was introduced. Furthermore, the Zimbabwe government hoped that massive inflows of foreign investments would strengthen the performance of the manufacturing and export sectors as well as create job opportunities. The latter would defuse a potentially explosive political time bomb for the Mugabe government which faces an unemployment rate of about 30 per cent.
Two and a half years after the ESAP was launched, the economy has contracted substantially. The growth rate has nose-dived to below zero in 1992. The drought of 1991-92 partly contributed to the decline in growth, but it is not the sole cause of the precipitous drop and of the substantial lay-offs that have occurred in both the public and private sectors.
Monetary and trade liberalization policies are the ESAP measures that have had an immediate and direct impact on employment and labour relations. Interest rates trebled in early 1992 to reach between 35 and 40 per cent. Coupled with the devaluation of over 40 per cent of the Zimbabwe dollar, firms have been driven to the wall under the new de-regulated monetary regime.
Not only have many new projects been shelved as a consequence of escalating costs; capital expenditure programmes that were already underway have been suspended. Some `blue chip' firms are reeling from a liquidity crisis. Medium and small-scale industries have been particularly hard hit with some going into liquidation.
Thus, what was intended as a curb on inflation and money supply has now become a fetter on investment and growth in the productive sector. Trade liberalization has also begun to exert an adverse impact on some industries - for instance, textile and clothing, motor vehicle and paper industries. An executive of a leading textile manufacturer, David Whitehead, has advised that if imported clothes continue to be allowed into the country, "we might end up with no textile industry in Zimbabwe."
Similarly, the Paper Manufacturer's Association has recently warned that the industry could be wiped out if the cheaper imports continue to be dumped on the Zimbabwe market. The spectre of de-industrialization has caused a great deal of anxiety within the Confederation of Zimbabwe Industries which represents organized business interests. While these interests may have benefited from a protected domestic market in the past, the lack of careful sequencing and coordination of ESAP may well undermine an industrial base painstakingly constructed over the past fifty years.
What has been, therefore, the direct impact of ESAP on employment, labour relations and workers' living standards? It was envisaged that about 28,000 public service and parastatal workers and another 20,000 private sector workers would lose their jobs by 1995 because of the ESAP.
The ostensible purpose of this retrenchment was to reduce government spending in the public sector and to increase productivity, via restructuring, in the private sector. However, it is now quite likely that more private sector workers will lose their jobs if the pattern of layoffs continues. The Zimbabwe Congress of Trade Unions (ZCTU) has estimated that by the end of 1992, some 15,000 private sector workers had already been laid off. Since then several thousand more jobs have been lost in the mining sector. In the public sector, 6,000 workers had been laid off and 7,000 abolished by July 1992.
Moreover, the numbers of fired workers has been much higher than the official numbers report because these figures do not include casual or contract workers who in some industries constitute as much as twenty-five per cent of the permanent work force.
Lay-offs have not only swelled the numbers of the unemployed; they have also had a devastating social impact. In most instances, the severance packages have been inadequate to the needs of the newly unemployed. One agro-industrial estate that laid off more than 3,000 workers because of ESAP and the drought recorded a fifty per cent drop in school enrolment among the children of the laid off workers and noticed a rise in crime statistics on the estate. In 1992, most company reports noted substantially reduced sales. One textile company reported a drop of fifty per cent in total production while the retail industry registered a decrease of thirty per cent in December 1992 over the year before.
Between May 1991 and June 1992, lower-income urban families experienced an average 43.6 per cent price increase. Food prices showed the steepest rise with an increase of 64.5 per cent. The price trends showed that this lower income group was being more severely affected by consumer price inflation. Yet most wage awards in 1992 were below 15 per cent, implying that the living standards of many workers were seriously affected.
In this context of lay-offs and unemployment, workers face a crisis of job insecurity and falling living standards. Under ESAP, employers' powers to hire and fire, without recourse to certain safeguards, have been strengthened. Collective bargaining revolves more and more around job security, severance packages and benefits and not exclusively on wage increases as tended to be the case in the past. The realism amongst workers as expressed through their unions is not reciprocated by employers. One company executive has frankly admitted that under the ESAP regime:
" . . . many managers confronted with financial crisis . . . found that the only area where they could take action with considerable degree of freedom was in the deduction of the head count through retrenchments. For a great number of companies, this option has proved not only to be the line of least resistance but also to be an area of where quick productivity gains can ostensibly be made.
"For an embattled management facing shareholders' discontent, retrenchment may be one of the ways to demonstrate to shareholders that management is determined to turn the situation around." [Mutizwa 1993]
The working-class, therefore, bears the heavier brunt not only of ESAP but of the limitations of management in adjusting to the `free market' economy. Notwithstanding the retrenchment regulations introduced in 1992 by government to control and monitor job losses, the present context has created an atmosphere in which lay-offs are portrayed as essential to economic restructuring. The workplace labour regime has undergone a transformation: discipline is tighter and threats of dismissal abound.
What are the political implications of ESAP on relations between the state, capital and labour? Business is not united in its support for the government's structural adjustment programme. Those firms that have been critical of ESAP have shared common ground with unions in their calls for a drastic modification or scrapping of the program. The survival strategies of those firms have incorporated mechanisms of consultation and negotiation with workers' representatives on a continuous basis.
In those instances where firms have taken advantage of ESAP to implement a harsher workplace regime, polarization has sharpened. The incidence of lock-outs and work stoppages have grown in 1993. As for relations between the Zimbabwe government and the labour movement, they have reached their lowest point since independence. Following the collapse of a social contract that had to a degree sustained social redistribution measures (education, health and land resettlement), the state is now viewed as pursuing a full-blown capitalist accumulation project in concert with domestic and international capital. From the labour movement's perspective, this explains why it was not consulted in the design of ESAP.
In the absence of a popular mandate to lend legitimacy to the ESAP, the labour movement believes its long-term effect on the Mugabe government will be negative. This is why it anticipates that the 1993 elections will be crucial and why there has been a debate within the movement as to whether to create a political wing to champion workers' interests in that electoral campaign. Workplace struggles are increasingly viewed as an inadequate response to political factors that increasingly impinge directly on labour relations.
From
Southern Africa Report
SAR, Vol 8, No 5, 1 May 1993
Page 16
"Unions"
Below is the article by Sachikonye.
Zimbabwe's economic structural adjustment programme, ESAP, is only half-way through its five year lifespan. But it has already become clear that its impact on the economy, particularly on employment and labour relations, has been far from positive.
In common with the structural adjustment programmes in other African countries, the main objective of Zimbabwe's ESAP ostensibly was to stimulate economic growth, attract foreign investment expand employment and reduce government expenditure through economic liberalization measures.
The measures introduced to reach this principal objective have been the basis of the orthodox package touted by the World Bank and the International Monetary Fund. The package typically prescribes trade liberalization, devaluation, privatization, huge cuts in government spending and social services like education and health and the deregulation of working conditions.
Zimbabwe's ESAP was intended to improve the annual economic growth to five per cent by 1995, up from an average of four per cent in the five year period before the ESAP was introduced. Furthermore, the Zimbabwe government hoped that massive inflows of foreign investments would strengthen the performance of the manufacturing and export sectors as well as create job opportunities. The latter would defuse a potentially explosive political time bomb for the Mugabe government which faces an unemployment rate of about 30 per cent.
Two and a half years after the ESAP was launched, the economy has contracted substantially. The growth rate has nose-dived to below zero in 1992. The drought of 1991-92 partly contributed to the decline in growth, but it is not the sole cause of the precipitous drop and of the substantial lay-offs that have occurred in both the public and private sectors.
Monetary and trade liberalization policies are the ESAP measures that have had an immediate and direct impact on employment and labour relations. Interest rates trebled in early 1992 to reach between 35 and 40 per cent. Coupled with the devaluation of over 40 per cent of the Zimbabwe dollar, firms have been driven to the wall under the new de-regulated monetary regime.
Not only have many new projects been shelved as a consequence of escalating costs; capital expenditure programmes that were already underway have been suspended. Some `blue chip' firms are reeling from a liquidity crisis. Medium and small-scale industries have been particularly hard hit with some going into liquidation.
Thus, what was intended as a curb on inflation and money supply has now become a fetter on investment and growth in the productive sector. Trade liberalization has also begun to exert an adverse impact on some industries - for instance, textile and clothing, motor vehicle and paper industries. An executive of a leading textile manufacturer, David Whitehead, has advised that if imported clothes continue to be allowed into the country, "we might end up with no textile industry in Zimbabwe."
Similarly, the Paper Manufacturer's Association has recently warned that the industry could be wiped out if the cheaper imports continue to be dumped on the Zimbabwe market. The spectre of de-industrialization has caused a great deal of anxiety within the Confederation of Zimbabwe Industries which represents organized business interests. While these interests may have benefited from a protected domestic market in the past, the lack of careful sequencing and coordination of ESAP may well undermine an industrial base painstakingly constructed over the past fifty years.
What has been, therefore, the direct impact of ESAP on employment, labour relations and workers' living standards? It was envisaged that about 28,000 public service and parastatal workers and another 20,000 private sector workers would lose their jobs by 1995 because of the ESAP.
The ostensible purpose of this retrenchment was to reduce government spending in the public sector and to increase productivity, via restructuring, in the private sector. However, it is now quite likely that more private sector workers will lose their jobs if the pattern of layoffs continues. The Zimbabwe Congress of Trade Unions (ZCTU) has estimated that by the end of 1992, some 15,000 private sector workers had already been laid off. Since then several thousand more jobs have been lost in the mining sector. In the public sector, 6,000 workers had been laid off and 7,000 abolished by July 1992.
Moreover, the numbers of fired workers has been much higher than the official numbers report because these figures do not include casual or contract workers who in some industries constitute as much as twenty-five per cent of the permanent work force.
Lay-offs have not only swelled the numbers of the unemployed; they have also had a devastating social impact. In most instances, the severance packages have been inadequate to the needs of the newly unemployed. One agro-industrial estate that laid off more than 3,000 workers because of ESAP and the drought recorded a fifty per cent drop in school enrolment among the children of the laid off workers and noticed a rise in crime statistics on the estate. In 1992, most company reports noted substantially reduced sales. One textile company reported a drop of fifty per cent in total production while the retail industry registered a decrease of thirty per cent in December 1992 over the year before.
Between May 1991 and June 1992, lower-income urban families experienced an average 43.6 per cent price increase. Food prices showed the steepest rise with an increase of 64.5 per cent. The price trends showed that this lower income group was being more severely affected by consumer price inflation. Yet most wage awards in 1992 were below 15 per cent, implying that the living standards of many workers were seriously affected.
In this context of lay-offs and unemployment, workers face a crisis of job insecurity and falling living standards. Under ESAP, employers' powers to hire and fire, without recourse to certain safeguards, have been strengthened. Collective bargaining revolves more and more around job security, severance packages and benefits and not exclusively on wage increases as tended to be the case in the past. The realism amongst workers as expressed through their unions is not reciprocated by employers. One company executive has frankly admitted that under the ESAP regime:
" . . . many managers confronted with financial crisis . . . found that the only area where they could take action with considerable degree of freedom was in the deduction of the head count through retrenchments. For a great number of companies, this option has proved not only to be the line of least resistance but also to be an area of where quick productivity gains can ostensibly be made.
"For an embattled management facing shareholders' discontent, retrenchment may be one of the ways to demonstrate to shareholders that management is determined to turn the situation around." [Mutizwa 1993]
The working-class, therefore, bears the heavier brunt not only of ESAP but of the limitations of management in adjusting to the `free market' economy. Notwithstanding the retrenchment regulations introduced in 1992 by government to control and monitor job losses, the present context has created an atmosphere in which lay-offs are portrayed as essential to economic restructuring. The workplace labour regime has undergone a transformation: discipline is tighter and threats of dismissal abound.
What are the political implications of ESAP on relations between the state, capital and labour? Business is not united in its support for the government's structural adjustment programme. Those firms that have been critical of ESAP have shared common ground with unions in their calls for a drastic modification or scrapping of the program. The survival strategies of those firms have incorporated mechanisms of consultation and negotiation with workers' representatives on a continuous basis.
In those instances where firms have taken advantage of ESAP to implement a harsher workplace regime, polarization has sharpened. The incidence of lock-outs and work stoppages have grown in 1993. As for relations between the Zimbabwe government and the labour movement, they have reached their lowest point since independence. Following the collapse of a social contract that had to a degree sustained social redistribution measures (education, health and land resettlement), the state is now viewed as pursuing a full-blown capitalist accumulation project in concert with domestic and international capital. From the labour movement's perspective, this explains why it was not consulted in the design of ESAP.
In the absence of a popular mandate to lend legitimacy to the ESAP, the labour movement believes its long-term effect on the Mugabe government will be negative. This is why it anticipates that the 1993 elections will be crucial and why there has been a debate within the movement as to whether to create a political wing to champion workers' interests in that electoral campaign. Workplace struggles are increasingly viewed as an inadequate response to political factors that increasingly impinge directly on labour relations.
From
Southern Africa Report
SAR, Vol 8, No 5, 1 May 1993
Page 16
"Unions"
Source - www.africafiles.org
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