Olivier Kazunga–Bulawayo Office
THE Confederation of Retailers of Zimbabwe (CZR) says the sector’s wage bill in the first half of the year rose above the recommended 3% of total revenue to 10%, largely due to falling sales from at constant employment costs.
Due to the Covid-19 pandemic, the first half of the year was characterized by different containment regimes intended to contain the spread of the disease.
In an overview of the retail sector for the first six months of the year, CZR Chairman Mr Denford Mutashu said the lockdown measures had negatively impacted business due to disruptions in supply chain and high costs of doing business.
He said that as essential service providers, most retail sub-sectors were open, although other retail sub-sectors considered non-essential remained closed.
“Lockdown measures have had a negative impact on real disposable incomes, mainly due to limited economic activity, with stores also opening for limited trading hours, currently limited from 8 a.m. to 3 p.m.,” he said. declared.
“During the first half of the year, most retail players saw their wages and salaries rise from the recommended less than 3% of total turnover to the current 7-10% of total turnover. , largely due to declining revenue versus a constant salary bill.”
The CZR president said the trend has seen some players downsize by terminating contracts while others have adopted a two-week rotation system and two weeks off.
Mr Mutashu said this was largely due to reduced opening hours.
“In light of the above, we call on the government to consider providing a subsidy to cover part of the salaries of employees.
“This grant may also allow players to rehire employees, help prevent further job losses and facilitate a return to normal operations,” he said.
In the midterm budget review report presented a few weeks ago, the government revised upwards projections for gross domestic product growth from 7.4% to 7.8%, citing a better 2020/21 rains, higher international prices for mineral raw materials, stable macroeconomic environment and better controlled Covid-19 pandemic.
“For the wholesale and retail sectors, the projections have been reduced from 5.7% to 5.1%.
“This downward revision reflects how the retail sector has been significantly affected by the nationwide lockdown measures imposed during the first half of the year as well as other factors,” Mutashu said.
During the reporting period, CZR members also incurred costs related to Covid-19 by implementing measures to combat the spread of the pandemic in order to ensure the safety of various stakeholders, including customers, employees and suppliers.
Implementing such measures comes at a higher cost, in the form of Covid-19 testing, the purchase of face masks, thermometers, hand sanitizers, staff passage fees and increased expenses. security and cleaning.
“In addition, the obligation to retest all employees in the event of contracting Covid-19 aggravates the situation. The retail sector employs a lot of people per store and it becomes expensive to test all employees,” he said.
“And in the unfortunate event that an employee contracts Covid-19, more trading hours are lost due to the forced shutdown to allow for disinfection, which can last up to three days of shutdown while adhering to standard operating procedures. .”
Mr Mutashu said the increase in load shedding over the past few months has presented huge challenges, as most players have been forced to rely on fuel-powered generators, which are expensive to run and add overhead. high generals.
During the first half of the year, Mutashu said domestic demand remained weak despite most retail establishments operating, largely due to the sector’s close ties to others that have been closed or restricted in their operations.
Household incomes have also declined, especially for city dwellers, due to reduced economic activity, which has affected disposable incomes.
“Furthermore, inflationary pressures have also eroded declining disposable incomes and reduced real consumption levels for most consumers.
“As CZR, we believe that consumer spending is a major source of economic activity and that the consumer shock and change in consumer behavior experienced since the start of the year should be addressed with measures that encourage consumers to have more income, create jobs, encourage investment and remittances, as well as reduce the trade deficit,” he said.