“The reason that much of our industries cannot compete in the field of exports is because our wages are too high given the level of productivity. These concepts go hand in hand,”
UNREALISTIC wage expectations at a time the country is benefiting from negative inflation, was hindering economic growth FBC Holdings chairman Herbert Nkala said.
Speaking at the launch of the 2015 edition of CASE Handbook on Wednesday, Nkala said while the nation continues to benefit from the fall in average prices, the cost of labour is yet to re-adjust.
“The reason that much of our industries cannot compete in the field of exports is because our wages are too high given the level of productivity. These concepts go hand in hand,” he said.
“High wages are fine to reward high productivity. What we see in Zimbabwe today is that productivity is not commensurate with current wage levels. Unrealistic expectations of what people should be earning, is the reason why Zimbabwe is not working. If there was a proper re-alignment of wages to output, I think many of our industries could compete,” Nkala said
Nkala said Agribank chief executive officer Sam Malaba had recently said that Zimbabwe had spent over US$3 billion on grain imports since 2009.
“Ultimately the reason for this in a fertile land such as ours has as much to do with wages as it does with the weather,” said Nkala.
The FBC chairman said the “most positive aspect” in the economy continues to be negative inflation, currently at -2,45 percent.
“In its results last week, OK Zimbabwe measured its average prices at -2,6 percent in the year to March 2015, and the forecast in this handbook is that we will be at – 5 percent to 7 percent by year end. Since July 2013, OK has reported falling average prices, which backs up Mangudya’s position that while liquidity remains tight, the dollar in your pocket gets you more and more as each year goes by,” he said
Nkala said he was heartened to see that in the African Development Bank’s report this week, the continent’s lender was still expecting the economy to grow by 3,2 percent this year.
“Mining production was up marginally in the first quarter and tobacco prices have picked up a good deal since the beginning of the season,” he said.
While Zimbabwe Stock Excahnge did not have a great first quarter, Nkala noted that markets throughout the region had seen very low trading values since the beginning of the year.
“We we will however, see our first listing in more than three years, as Masimba demerges its Proplastics business next month. This is a successful manufacturing company and I understand – in light of all the talk about de-industrialisation that all three finalists for this year’s Company of the Year Award are manufacturers,” he said.
Cafca won the Company of the Year Award and has consistently reported profits since dollarisation, which is no mean feat for a manufacturing company. Afdis and Natfoods were also contenders for the award.
Nkala said FBC regarded its sponsorship as an important contribution to the business community.
“Not only is this a book of record, but it helps business understand what is happening in a region that we have long historical ties with,” he said
The function – dubbed the Corporate Event of the Year – also saw a lucky guest winning two business class tickets to Cape Town courtesy of Comair.