No post-Covid reprieve as companies retrench more
NEARLY 20% of local companies reported job layoffs during the first nine months of 2022 despite reporting growth in profit following the easing of Covid-19 restrictions, a new report by the Confederation of Zimbabwe Industries (CZI) has revealed.
The outbreak of the pandemic in 2019 led to most economies revising their economic growth targets as many governments battled to contain the spread of the virus and overwhelmed health delivery systems.
According to the CZI, the country’s organised manufacturing sector lobby group, most companies reported growth in profit post Covid-19.
“Although job creation is positive, unfortunately there were also some firms that retrenched workers. This also includes those that created new jobs; about 8% of the firms that created jobs also retrenched, and these are mainly in the wholesale sector, which could reflect casual workers on short contracts,” the CZI’s third-quarter report shows.
“On the overall, about 17% of the firms indicated that they had retrenched employees during the period under review. The agriculture sector is also among those sectors with a ratio of firms indicating that they had retrenched exceeding the national average. In terms of the actual level, on average, firms that retrenched parted company with about 16% of their total employees over the nine months to September 2022.
“The distribution of the retrenchment patterns with respect to age shows that among those that retrenched, firms that are still relatively new (10 years and below) had a higher ratio of workers leaving compared to those fairly older in business.”
The report also shows that almost 41% of the businesses indicated that profitability of their businesses had improved during the first nine months of 2022.
“Given that corporate tax in general performed below target, this means that these 41% might have registered only very minimal increases. However, about 28% of the businesses indicated that their profitability had dropped, with close to a third of the businesses believing there were not many changes in profitability,” the CZI says.