Labour Relations Act under surgery

Newsday

By Munyaradzi Mugowo

20 September 2010

Government has agreed to amend the country’s Labour Relations Act to make it equally friendly to employees and employers following a year of intense lobbying by the private sector, which wants an end to the system of wage arbitration and what it considers an onerous labour appeal and dispute settlement procedures.

Business argues that labour costs now rank second after raw materials in terms of contribution to production costs, undermining its competitiveness, and this is arising from “unrealistic” wage
increments by national employment councils (NECs) acting on flawed provisions of the Act.

The legal framework for labour relations in Zimbabwe was last comprehensively reviewed in 1992 through the Labour Relations Amendment Act No 12, and since then four statutory instruments (SIs) have been passed to solve a growing number of sticking issues arising from fundamental provisions of the Act.

These include SI 31 Labour Relations (General) Regulations of 1993 and SI 30 Labour Relations (Settlement of Disputes) Regulations of 1993. The two subsidiary legislations repealed SI 368 of 1985 and SI 369/1985, respectively.

Initiated last year, the latest effort aims to review the system of wage arbitration blamed for stoking firms’ costs of production under the present “dollarised” environment as well as the current three-tier appeal procedure in case of a labour dispute, which prolongs labour disputes, among other issues.

Quoting a recent survey Antony Mandiwanza, Group CEO of Dairibord Holdings, told a Confederation of Zimbabwe Industries (CZI) conference last month that labour costs now rank second after raw materials in terms of contribution to production costs and blamed this on NECs and arbitrators.

Mandiwanza said the wage shock aggravated a general cost spike arising from “dollarisation”, undermined local firms’ cost competitiveness.

“This (high labour costs) has implications for cost competitiveness,” Mandiwanza said.

“Many people have been asking why local products are more expensive than imports.

“The answer is the competitiveness of the Zimbabwean player is being eroded by high production costs as a result of high the cost of labour and utilities.

“This is why we must take an active role as business in the process of reviewing the Labour Relations Act.”

The interests of the private sector are being represented by the Employers Confederation of Zimbabwe in the legislative review process.

Mandiwanza added that the only strategy available to local firms is to link bonuses to performance and that way reduce labour to a variable cost.

Godfrey Kanyenze, the director of the Labour & Economic Research Institute of Zimbabwe, concurred and added that Zimbabwe’s Labour Relations Act had created an aristocracy of “overprotected employees” whose fortune depends on NECs rather than performance.

“The strategy for workers is to declare a deadlock and refer the case for arbitration, which often awards an increment outside the permissive factors,” Kanyenze said.

“What the arbitrator simply does is to average what the workers demand and what the employers offer to come up with an arbitral award.”

He added that the Labour Relations Act provides for quarterly wage reviews by NECs and for an appeal in case of non-compliance or violation.

The labour appeal procedure is widely considered cumbersome, costly and inefficient.

According to David Coltart, Education minister and prominent labour lawyer, Zimbabwe’s appeal procedure must be reduced to a two-tier system as the present procedure tends to complicate labour disputes by holding a case for up to five years.

Under the current three-tier appeal procedure, initially disputes are still handled by labour relations officer who can either make a determination or refer the matter for determination by senior labour relations officer.

In terms of SI 30 of 1993, any party who feels aggrieved by the determination can appeal to the Labour Relations Tribunal.

“And the procedure isn’t finished yet as any party
aggrieved by the decision of the tribunal can still appeal to the Supreme Court which will take at least another year,” Coltart said, adding the process of appeal can take up to five years to the benefit of layers.