Zimbabwe: Massive Layoffs Rock Financial Sector
More than 300 workers in the financial services sector have been laid off in the last two months as companies rationalise their cost structures in a tough operating environment amid economic recession.
The job losses come against a backdrop of an economic decline characterised by a debilitating liquidity crunch, an acute foreign currency shortage, low capacity utilisation of less than 30%, prolonged power cuts of up to 18 hours a day, runaway year-on-year inflation hovering at 353% and weak aggregate demand.
Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo told businessdigest yesterday that more than 300 workers have been laid off in the last two months in the financial sector alone.
“Our affiliate Zibawu (Zimbabwe Banks and Allied Workers’ Union) are in trouble because more than 300 of its members have lost their jobs in the last two months across the financial sector,” Moyo said.
Banks that have laid off staff include BancABC, CBZ, First Capital and Standard Chartered, he said.Last week, Old Mutual Ltd informed its staff that it has embarked on a voluntary retrenchment scheme.
According to the company’s memo, Old Mutual Group chief executive Jonas Mushosho said the harsh operating environment has necessitated the voluntary retrenchment process.
“The economic challenges facing our country and the business have not relented, given the high inflation rate and the need to control total operating costs. It is important for the business to reduce costs,” he said.
“In April 2019 management rolled out a voluntary retrenchment scheme as a way of managing costs in response to the deteriorating economic environment. However, the response to this voluntary retrenchment exercise was below expectations”.
Mushosho said management has improved the package for those who are willing to volunteer for the exercise.Management, he pointed out, will endeavour to conclude the retrenchments timeously in order to preserve value of the severance package.
He also said the company would give the employer the equivalent of 12 months of total salary plus economic hardship allowance lump sum payment as severance pay as at the date of retrenchment.
The company is also offering a gratuity package of 75% of monthly gross pay plus hardship allowance for each year of service up to a maximum of 24 years.
Also, the employer’s medical aid contributions will continue for one year from date of retrenchment and post-retirement medical aid subsidy for retrenches who are 55 years old and above.
The retrenchments have not subsided despite the change in government under President Emmerson Mnangagwa on the back of a military coup that resulted in the removal of former president, the late Robert Mugabe.More workers are seen losing jobs as the economic recession worsens.
More worryingly, Mnangagwa’s government has not instituted far-reaching measures to turnaround the economy.
Companies tend to lay off staff in tough economic times as demand for products and services weakens.
Hyperinflation has also piled on the misery on workers after earnings were significantly eroded.
More than 2 800 workers were retrenched by 73 companies in 2017 for various reasons ranging from restructuring to viability challenges.
A total of 8 843 workers were laid off in 2015 and 2016.In 2015, 5 333 workers were retrenched and this does not include those who were affected by the July 17 Supreme Court ruling that year, which allowed employers to dismiss workers on three months’ notice.
In 2016, there were 3 510 workers who were retrenched, signalling the continued haemorrhaging of jobs.
More than 6 000 workers were retrenched in 2014. Thousands were also dismissed using the July 17 2015 ruling. While trade unions have estimated that around 30 000 were dismissed using the ruling, employers armed with a survey have argued that 9 115 workers were affected.
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