By Own Correspondent

THE United States government has warned that Zimbabwe's strict labour regulations are making it increasingly difficult for employers to respond to economic downturns, as retrenchments continue to rise across key industries.

In its recently released 2025 Zimbabwe Investment Climate Statement, Washington highlighted that the country's labour framework — which restricts layoffs and limits contract terminations — has left many businesses unable to adapt to economic challenges.

"The country's labour laws make it very difficult for employers to adjust employment in response to an economic downturn, except in the Special Economic Zones (SEZs) where labour laws do not apply," the US State Department said in its report.

"Outside the SEZs, the employer must engage employees and their representatives and agree to adopt measures to avoid retrenchment. If the measures fail, the employer can retrench and pay an all-inclusive package of one-month salary for every year of service or the pro rata share thereof."

The report comes as Zimbabwe continues to experience widespread job cuts, particularly in manufacturing, construction, and retail, as firms battle mounting operational costs and falling consumer demand.

In September, Public Service, Labour and Social Welfare Minister Edgar Moyo announced that the government would intensify scrutiny of retrenchment exercises and investigate companies accused of abusing the process.

Moyo's remarks followed growing reports of firms laying off permanent staff only to rehire for the same roles on short-term contracts — a tactic unions claim is designed to avoid paying higher wages and benefits to experienced workers.

According to the US report, Zimbabwe's Labour Act and its 2015 and 2023 amendments permit the termination of contracts only under specific conditions — including mutual agreement, expiry of a fixed-term contract, or through a registered code of conduct.

In cases where a company does not have its own employment code, it must adhere to the national model code when carrying out dismissals. The law does not recognise "unfair dismissals" or arbitrary layoffs.

The State Department also noted that Zimbabwe's collective bargaining framework applies across entire industries and not just to union members. Negotiations occur both at the enterprise and sectoral levels under National Employment Councils (NECs).

"Unions representing at least 50% of workers may bargain with the authorisation of the Minister of Public Service, Labour and Social Welfare," the report stated.

"The law also encourages the creation of employee-controlled workers' committees in enterprises where less than 50% of workers are unionised."