Zuva Ruling, Necessary Evil?

Zuva Ruling, Necessary Evil?
The landmark ruling by the Supreme Court on the case of dismissals Don Nyamande
and Kingston Donga by Zuva Petroleum, which the court held to in accordance with Section 12B of the labour Act has sent unprecedented despondency and uncertainty among workers as one of the lawyers for the company, Nelson Chamisa, MP was labelled an evil demon.
The blinkers have been removed from the eyes of the few remaining workers. At a time when the country is sailing through economic hardships, the ruling is probably a D-day ruling for employers and entrepreneurs and a nightmare for workers. The ruling means that employers can terminate employment contracts with a simple three months’ notice, thereby presenting a massive cost cutting opportunity, as companies are no longer obliged to part with lump sum severance packages. This has come at a time when many companies are contemplating on retrenchments across the country due to weak economic environment.
While many workers are outrageous of this ruling that puts them in a predicament and mercy of their employers, the ruling is correct reading of the law according to legal experts. It means the problem is the labour act which fails to espouse those rights to the workers. While retrenchments are a global phenomenon due to a number of factors such as economic structural cycles such as recessions and traditional product cycles such as decline stage and technological changes among other factors. Global headlines have been carrying massive retrenchment and layoffs by global giants like Motorola, General Motors, HSBC and many others where hundreds of thousands of workers have been laid off. The difference is that in those countries and in Zimbabwe all along workers were getting severance packages. Most people do not have a problem with properly implemented retrenchments, if revenue is declining no one can expect a business organisation to keep workers when the cost of keeping them is now surpassing the benefit of keeping them.
As the argument by Milton Friedman captures it correctly that business organisations exist for solely making profits and growing shareholder wealth. Therefore managers are supposed to contain cost and grow revenue in a way of achieving the objective of maximising shareholder wealth. This being the case, employees also want job security, they want to be compensated for the years which they have spent on the company, and they have forgone some opportunities of joining other organisations in some cases. Sending employees home empty handed is a rational appealing, excessively tempting and cheap alternative to employers. For argument sake, who would not chose a cheap option or a free option given that roles were reversed? Sending employees home empty- handed is grossly immoral and unethical behaviour regardless of the legal status.
While businesses do not retrench people for sadist purposes, it is morally wrong and repugnant to say the least, even among the staunchest of capitalists to retrench people empty handed is not right. Entrepreneurs who do and will so, will saving themselves tons money but are inherently posterity of slave traders in spirit and deeds. These heinous acts against humanity should not be heard of the 21st century, these moves reflect badly on the government’s part of protecting workers and on such companies, in developed countries where there are strong consumerism movements, such companies could suffer from severe backlashes such as consumer boycotts and loss of market share, sabotage from demotivated workforce. The move will reduce costs in the present moment but may haunt these companies in the long run, except for those which are folding operations for good.
The wave of retrenchments will further weaken the economy, consumer confidence is already at its lowest ebbs. Lower aggregate demand will further erode the dwindling profits. Hence it will hit back to the same companies especially those whose market is local. This will also negatively affect the government as it means lower tax base in terms of PAYE and Vat from low demand etc. In a way the biggest loser will be the government as the sources of taxes will be diminishing, as many people would then either resort to informal trading the government will be economically crippled and will struggle to pay civil servants. This however can also be an opportunity which the government set in order to get rid of its own bloated public service too.
Will such waves of retrenchments trigger some disorder and massive demonstrations? The answer is least likely, most people in Zimbabwe are now used to suffering, and the majority of the young generation do not know formal employment. The formally employed are making less than 20% and are therefore a minority, who would just join the rest of their countrymen in the underground economy
However government intervention should not be only politically motivated, it should be balanced with the interest of the investors and entrepreneurs taken care and the same time a cushion measures should be available to workers.