Minimum Wages And Collective Bargaining In Zimbabwe Compiled By Naome Chakanya, Ledriz, September 2016

Table 1: Trends in Wage Bargaining Outcomes ($), 2011-2016

Source: LEDRIZ, 2015 CBA Audit Report & Primary data collection

Table 1 clearly shows that the collective bargaining environment has been deteriorating since 2011 mainly due to the continued economic decline. Table 1 indicates that whilst in 2012, a total of 14 unions realised wage increases ranging between 6% to 22%, the number of unions with wage increases declined significantly from 14 to 3 by 2015 and the percentage range increase also declined to between 2% and 3% increase. The number of unions with unresolved (deadlocks or still in progress) wage negotiations increased from 9 in 2014 to 14 in 2015.This clearly indicates the most unions and workers have been losing out in wage negotiations depriving them of decent working conditions. 

2. Sectoral Minimum Wages versus the Cost of Living

2.1 Comparison between Private, Public, Municipal, Parastatal and NGOs wages

In the context of Zimbabwe, the living wage is equivalent to the Poverty Datum Line (PDL). PDL is the minimum amount of money required by a family of 5 in order to meet the minimum basic requirements of life per month. Table 2 shows a comparative analysis of the various sector average monthly wages vis a vis the Poverty Datum Line (PDL).

Table 2: Average Monthly Earnings, Poverty Lines and Per Capita Income

Source: LEDRIZ, 2015.

Table 2 shows that between 2009 and 2014, wages in the private sector have continued to lag behind other sector wages, leaving workers in the private sector the least paid and worse off than their counterparts in other sectors. Over the given period, the highest average minimum wage was in the NGO sector, followed by municipal, parastatal, public and private sector in that order. Whilst all average minimum sector wages have remained above the FPL, most have failed to be at par with the PDL. Both public and private sector wages have failed to reach the PDL level for the given period save for NGOs wages and municipal and parastatal wages between 2013 and 2014. This means that the rest of the workers earning less than the living wage (PDL) makes them poor.

2.2 The Private Sector: A sectoral analysis

Figure 1 shows the sectoral minimum wages of 2015 versus the 2015 FPL and PDL. The FPL for 2014 was USD157 before declining slightly to USD156 in 2015. On the other hand, the PDL for 2014 was pegged at USD506 before declining slightly to USD491 in 2015.

Figure 1: 2014/15 Sectoral minimum wages versus 2015 FPL and PDL

Source: LEDRIZ 2015 CBA Audit Report & Database

Figure 1 shows a saddening picture of the state of most workers in Zimbabwe where the sectoral minimum wages have failed to be more or at par with the PDL. Whilst most of the sectoral minimum wages except general agriculture were able to meet the FPL, the majority of the sectors could not meet the PDL except for the banking sector. Using Table 3 below, the analysis revealed that agriculture sector workers are classified as totally poor. The majority of the workers are in the “poor” category whilst the banking sector workers are regarded as non-poor. Poverty wages are a sign of decent work deficits.

Table 3: Classification of households by income

Using Figure 1 and Table 2, it clearly shows that wages in the private sector in Zimbabwe have failed to lift workers out of poverty, ranking them the “working poor” according to the ILO standards. This poverty situation in the labour market, is also a reflection of the overall national poverty situation as illustrated in Table 4.

Table 4: Household and Individual Measured Prevalence of Poverty (%): 2011 /12

Source: ZimStat, 2013- Poverty and Poverty Analysis in Zimbabwe, 2011/13

Using the per capita consumption expenditure approach to measure poverty incidence in Zimbabwe, the Poverty, Income, Consumption, Expenditure, Survey (PICES) of 2011/12 period observed that 62.6 percent of Zimbabwean households were poor, whilst 16.2 percent of the households lived in extreme poverty; 72.3 percent of Zimbabweans (individuals) were poor while 22.9 lived in extreme poverty. Rural poverty (individuals) in particular was 84.3 percent. Comparing with the SADC level and Sub-Saharan level shows that Zimbabwe is far worse. For instance, the 72.3 percent the level of poverty in Zimbabwe was way above the Sub-Saharan average of 46.9 per cent and the SADC level of 45 per cent in 2011 respectively. The PICES (2011/12) showed that as a result of the low incomes, households in Zimbabwe were selling financial assets more than they were buying them, suggesting a dissaving scenario to fund current expenditures since incomes fall short of current consumption expenditures. 

2.3 Wage differentials between Management and Ordinary Workers in Selected Parastatals

In 2014, LEDRIZ conducted a survey on wage differentials between management and ordinary workers. The results are reflected in Figure 2.

Figure 2: Basic Salaries (per month), selected parastatals

Figure 2 shows that by 2014, there were huge income disparities between top management and middle management, top management and ordinary workers, and between middle management and ordinary workers within most enterprises.  The gap is smaller between middle management and ordinary workers showing that the CEOs are the ones benefitting a lot from these ailing state-controlled enterprises at the expense of ordinary workers. Since then, the income disparities between the highest and lowest paid have continued to widen reflecting the different ways of determining the levels with collective bargaining at the lower echelons and entitlement-based contracts at the top. The irony in the parastatals is that employers pay high salaries, packages and benefits at the top management level but bemoan the inability to pay wages for the lower echelon workers. In view of this, there is an urgent need for the creation of an equitable earnings structure that ensures that all workers earn a decent and living wage as well as adjusting and maintaining the minimum wage for workers in line with the PDL.

3. Emerging issues: Non-payment of wages and salaries

One of the most daunting and emerging challenge for workers between 2014 and 2016 has been the non-payment of salaries by employers especially in the private sector. Non-payment of wages and salaries in this case refers to unpaid workers, no wage, no package, partially paid workers, laid off and with no package workers.

Whilst non-payment of wages started in earnest in 2012 due to the deteriorating economic environment, the rate escalated in the period 2014 to 2016. During 2012, both parastatal and private-sector companies began to lag on payment of wages citing viability challenges. At first, many companies started paying wages very late in the month, with some paying during the first or second week of the following month. Some companies only managed to pay half the wage or salary due. By the beginning of 2013, the situation had worsened as some companies completely failed to pay wages and salaries, citing cash-flow and liquidity problems. However, workers were still expected to come to work, even when their wages or salaries were in arrears Thus, the number of workers who were receiving partial paychecks or no wages at all grew. In addition, many workers who were laid off frequently did not receive back wages. Others have received back wages, but not the agreed employment termination packages they were due.

In addition, a survey by LEDRIZ and Solidarity Centre (2015) based on 442 companies indicated that a total of 82,776 workers were affected by non-payment (wage theft) in 2015. Figure 3 shows the sectoral distribution of non-payment of salaries in 2015.

Figure 3: Sectoral distribution of workers affected by non-payment of wages and salaries, 2015

              Source: Wage Theft Survey (Solidarity Centre/LEDRIZ), 2015

According to Figure 3, the top ten sectors affected by wage theft were urban councils (22,228), agriculture (12,034), motor industry (7,622), security (7,514) and railways (7,354). The least affected was the banking sector with 10 workers at one company. Non-payment of salaries has further reduced workers in Zimbabwe to the category of “working poor”.

The survey also categorised non-payment of wages according to unpaid workers, no wage, no package, partially paid workers, laid off and with no package as shown in Figure 4.

Figure 4: Categories of Non-Payment of Wages

Source: LEDRIZ/Solidarity Research, 2015

Figure 4 indicates that the highest number of workers facing non-payment of wages fell in the category unpaid workers. This was followed by those who were laid off with neither a wage no package (28%). The third category were those workers who were partially paid (19%), with the least category being those workers laid off with no package (10%). Worryingly is that with this unbearable wage situation, workers were still required to report to work, failure to which termination of employment applied. Due to lack of alternative employment in a crisis-stricken country, workers are left with no choice but to find ways of reporting for work despite the non-payment of wages.

The same survey revealed that non-payment of wages and salaries averaged between 3 and 25 months across sectors as indicated in Figure 5.

Figure 5: Average Number of Months Unpaid

Table 5 indicates some of the challenges in collective bargaining emanating from the government side, employers side and trade union side.

Table 5: Challenges to collective bargaining and attainment of decent work

Source: LEDRIZ 2015 CBA Audit Report

5. Recommendations

1. Harmonisation of the various Public Service Acts with the main Labour Act to ensure that public sector workers fully enjoy workers ‘rights including collective bargaining rights;
2. Resuscitation of the national of national tripartite meetings through the Tripartite Negotiation Forum (TNF) composing of Government, Business and Labour. The TNF should deal with the volatile macroeconomic environment which is in turn affecting the collective bargaining environment, processes and outcomes including non-payment of wages and salaries;
3. Domestication and effective implementation of the of the ILO Convention on Protection of Wages Convention, 1949 (No. 95) to deal with the issue of wage theft;
4. Restoration of the basic requirements of social dialogue at national and NEC level which includes:

• Recognition of the right of workers and employers to associate freely and to establish organizations of their own choosing;
• Strong, independent, representative and democratic workers’ and employers’ organizations, having knowledge of key issues;
• Access to and effective involvement in social dialogue institutions and processes and the capacity to influence social and economic discussions.
• Government creating an enabling policy, legislative and institutional environment;
• An environment which includes effective machinery and mechanisms to facilitate and promote collective bargaining, prevent, manage and resolve labour disputes, and enforce laws and regulations through labour inspection and the judicial system.

5. Continued strengthening of trade union negotiators through capacity development (education and training) given the massive deindustrialization taking place, high staff turnover in companies, and loss of trained negotiation cadres.
6. An integrative approach to collective bargaining which takes into account both internal and external factors in order to come up with a win-win scenario in collective bargaining outcomes.
7. Inclusion of non-wage benefits in collective bargaining that promote decent work elements such as medical aid, paternity leave, personal protective clothing, HIV and AIDS programmes, food (canteen) provisions, industrial pensions, among others.
8. Review of NECs role to move from just focusing on wage negotiations but to also focus on:

• human resource development;
• skills development;
• sectoral productivity and competitiveness;
• sectoral trend analysis, among others.