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‘70% Zim firms pay annual bonuses’

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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

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