NEARLY seven in every 10 companies in Zimbabwe last year paid annual bonuses despite a general slowdown in economic growth, a study by a local human resources consultancy firm has shown.
According to a survey carried out by Industrial Psychology Consultants (IPC), the majority of 89 firms that participated in the survey paid out the 13th cheque to employees in spite of operational challenges being faced by the firms.
When asked if the bonus was performance related 35,96% said it was and 42,70% paid a guaranteed bonus with no link to either company or individual performance. Companies in the manufacturing sector, whose capacity utilisation dropped to 39% last year from 44% in 2012, the report stated, managed to pay bonuses.
“A total of 67,42% paid a bonus in 2013 while 25,84% said they were not paying. Only a small percentage was not sure (6,74%) at the time of the survey. At a time when many companies are complaining of liquidity challenges it is surprising that 67% paid a bonus,” read the report.
“It is our prediction that we are likely to see a similar number of companies paying bonuses not because they can afford, but because of contractual obligations to employees that do not factor company and individual performance.”
This trend, according to IPC, is likely to put more companies into financial dire straits.
“We also predict that retrenchments will not increase significantly due to the costs involved. We are likely to see more company closures and liquidations were employees walk away with nothing. 2014 is likely to be a very tough year and every company needs to dig deeper for strategic inspirations, failure of which we will see many more companies closing,” the report stated.
“On the budgeted increase for 2014, the projected average increase is 9,68%. There are companies that have budgeted for as little as 2% to as high as 20%. It seems that increases for 2014 will not exceed 10% with the majority of organisations not planning an increase at all. 2014 is likely to be a very tough year for collective bargaining considering the projected economic difficulties.”
The survey also showed that 83,15% of the respondents indicated that they did not retrench in 2013, with only 16,85% having gone through retrenchment.
“When asked why they were not paying bonuses, most companies cited poor company performance compounded by liquidity, cash flow problems and low sales,” the report added.
Zimbabwe’s economic growth rate last year declined on the back of an underperforming agriculture and mining sectors.
Zimbabwean companies are struggling to stay afloat weighed down by the absence of long term financing for retooling.
This has led to massive retrenchments with statistics from the Zimbabwe Congress of Trade Unions indicating that at least 300 employees were being retrenched weekly. NewsDay