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Matthias Ruziwa HR Issues
Organisations and HR practitioners need to monitor the state of the labour market and keep an eye on likely developments in the economy. It is a fact that the HR fraternity was hit by a tumultuous period in which over 20 000 employees reportedly lost their jobs following a Supreme Court judgment SC43 /2015 allowing employers to terminate workers on three months` notice.

This happened at a time when labour, business and Government were already in the process of amending the Labour Act to align it with the Constitution, ILO Conventions and the nation`s economic blue-print, ZIM-ASSET under the auspices of Tripartite Negotiating Forum (TNF). On 14 August 2014, a Labour Amendment Bill HB7 /2015 was gazetted and it has sailed through both the National House of Assembly and Senate. The Bill is now waiting for Presidential assent to become law.

The fundamental issues envisaged in HB7 /2015 are more to do with what has been taking place in the economy and the labour market.

In my view, the need to strike a balance between the interests of labour and industry is revolving on aspects such as promotion of industrial competitiveness, the need to attract investors (both domestic and foreign), and protection of labour rights. Economic conditions provide the background to the everyday business of any labour expert.

What happens in the macro economy, or in individual product and labour markets, ultimately determines how many staff organisations need to recruit, retain and develop in order to meet customer demand.

According to a study carried out by the Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) (2014) entitled “Cost Driver Analysis of the Zimbabwean Economy”, “Along with capital, labour is a basic factor of production, and its costs influences the costs of all goods and services produced in the economy in the proportion of the particular intensity with which the production process utilises labour.

As such, it has a cross-cutting influence in all the other identified cost-drivers, including finance. In some sectors, such as manufacturing and banking, it might represent as much as 33 percent and 55 percent respectively of total input costs. It is therefore critical to ensure that wage levels are aligned with overall growth and productivity in the economy”.

The economy is shorthand for a myriad of relationships that help allocate human and other resources to the production, distribution and consumption of the various goods and services that people want or need.

A combination of the relative demand for these goods and services and the relative supply of the resources required to produce them determines their price (or market value). Adding up the market values of all the things produced gives a total measure of the size of the economy.

The most commonly quoted measure is known as Gross Domestic Product (GDP).The percentage rate of change in GDP over a given period of time, say a year or quarter is a measure of economic growth. The level of output for an economy is constrained by consumer demand and inputs such as land, capital, energy and labour.

Levels of output also depend on how well these inputs are used to produce goods and services that are valued by consumers or users of public services — this is known as the productivity of the economy.

Economic theory suggests that, to improve productivity, organisations should constantly review their operations to ensure that they are capable of exploiting innovative ways of doing things, taking advantage of new ideas, new sources of labour and new ways of organising the business.

In his 2015 Mid-Year Fiscal Policy Review Statement, Finance Minister, Honourable Patrick Chinamasa remarked that “The Macro-economic Framework underpinning the 2015 National Budget projected moderate growth of 3,2 percent and average annual inflation of 0,2 percent”.

The human resources that contribute to GDP are bought and sold in the labour market.

The greater the amount or quality of human resources supplied to the market the higher the potential level of GDP. But this potential will only be realised if there is sufficient demand for these resources, which is itself derived from the demand for goods and services.

The market demand for labour is measured by the number of people in work (employment) and how much hours they work. Supply is measured by employment plus the number of people who are looking for work.

The balance of demand and supply in the labour market is reflected in the level of wages and salaries. If demand is high relative to supply, earnings will rise.

This will increase the cost of employing people (assuming no change in their productivity) which in turn will cause demand for human resources to drop, easing the upward pressure on wages.

If, by contrast, supply is high relative to demand, we would expect employment costs to fall. Our labour market is currently characterised by high supply of labour with few vacancies and lots of job seekers.

I would like to conclude by encouraging HR practitioners to keep track of the changes in the labour market and the economy, so that we may be able to sustain the organisations in which we work by effectively reacting to market conditions.

The developments currently taking place in the labour market are not unique to our situation.

 Matthias Ruziwa is an experienced and progressing Strategic Human Resource Practitioner. He is also an independent arbitrator practicing in the Midlands Province, City of Kwekwe. Opinions expressed herein are solely those of the author. You can contact Matthias at the following email address: [email protected] whatsapp: 0773 470 368