DURING May Day celebrations, trade unions and other workers associations in Zimbabwe called for living wages amid a cost-of-living crisis characterised by high inflation, increasing poverty levels and high unemployment.
The black market rates have skyrocketed to $2 700 against the United States dollar. In simple terms, it means those earning US$500 and above should now be paid more than $3,5 million using the black market rate.
With an increasingly momentous disconnect between the cost of living and the cost of labour (wages) in Zimbabwe, HR has a role to play to support employees during this cost- of-living crisis.
Cost of living has overtaken cost of labour
Runaway inflation has driven the majority of Zimbabweans below the poverty datum line. Inflation has caused cost of living expenses to regularly increase. As the prices of everyday items such as food, rentals, gas, clothing and utilities rise, your employees are greatly affected.
To remain in a sustainable financial situation, wages must go up as living expenses go up. The current situation is dire and everyone knows that most employees and some employers as well are severely incapacitated and we are facing an existential crisis, a real crisis of existence. There is a widening gap between employee expectations and what organisations can reasonably offer them, which could prove toxic to companies if left unaddressed.
What is cost of living and cost of labour?
Cost of living refers to the amount of money required to maintain a standard of living, accounting for basics like rentals, food, clothing, utilities, taxes and healthcare. In other words the cost of maintaining a certain standard of living is what we call cost of living. When the wages you get keep up with living expenses things will be normal, but when what you get cannot cater for you, it is a red flag indeed.
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This rise in the cost of living is eating into the little disposable incomes of workers and a lot of people who are already suffering under the weight of unemployment. The result will be a serious decline in standards of living and tremendously high poverty levels among the majority of Zimbabwe.
Cost of living is HR’s biggest challenge
A very important aspect of working is for people to get paid fairly and adequately. The problem or a mismatch now comes when what you are getting is much lower than your general expenses and that mismatch becomes a headache.
The reason why the cost-of-living crisis is such a challenge for HR teams is that they are unsure of the action to take, and how to best support their workers without compromising business bottom lines. Of course, the obvious solution to the cost-of-living crisis is to give all employees a pay rise.
However, it is important to remember that many employers are also struggling financially — price increases do not just impact individuals, they also negatively affect businesses and their bottom lines. Salary increases are often an excellent way for businesses to support their employees through a cost-of-living crisis.
Why should the cost-of-living crisis be a priority for HR?
HR’s unique role within a business is strike an important balance. Not only must they take on the responsibility for employee wellbeing, but they must also act in line with the financial limitations communicated by senior staff; so as to be productive. In most organisations, financial concerns could, in fact, quickly become a catalyst for deeper issues within a business if not addressed.
Apart from the most obvious risk of employees leaving for higher pay elsewhere, employers are already witnessing a surge in quiet quitting, disengagement, and damaged morale. When employees struggle, so does their workplace. If your organisation is in a position to offer financial support, you could find that it has a noticeable impact not only on your reputation, but also on your company’s culture, productivity and employee long-term loyalty.
HR should address related problems
Employers can be much more creative when it comes to pay and rewards. By implementing initiatives to support employees and support revenue growth, businesses will be in a stronger position in the long term.
With financial pressures weighing down even the most enthusiastic of employees, there is no doubt that if HR does not interject it will impact morale in the business. Here are several options for employers to consider.
How else can HR help?
The difficult truth is that, while most employers will see a moral drive to help staff through tough times, it simply may not be within the budget. So, if you’re struggling to get the salary increases or a cost of livingadjustments, see what HR can do at least to keep employees engaged and motivated since the rise in the cost of living cuts a deep wound in the lives of people. A cost of living raise is an increase in pay that’s intended to keep the buying power of an employee’s salary the same during a period of inflation.
Without a cost of living raise, the declining value of the dollar would leave workers with less real money in their pockets. To lessen cost of living pressures and maintain sustainability of remuneration it may be necessary to look at the following options.
Review your benefits packages
The first question you must answer before addressing employee issues is: are the employee benefits as useful as they should be? Taking time to review existing benefits and explore whether or not funds would be better spent elsewhere could make a huge difference in difficult times.
Getting employee feedback through a pulse survey is an efficient way to tackle this. By offering staff the chance to share what they would like to see, whether access to financial wellbeing checks or more tailored “money back” schemes for the services they use most HR can maximise the “benefits” of employee packages.
Linking wages to productivity
If an entity is earning its revenue in foreign currency, we have no problem if it also pay its employees in forex, but if they are generating revenue in local currency it will be a problem. Directly linking wages to productivity, the employee is continuously rewarded for hard work, which drives him to produce more profits for the business.
The relationship between productivity and wages is a central issue for fair distribution between labour and capital. Productivity can be defined as the amount of goods and services (output) produced in the economy for every unit of labour. For example, output per worker and output per hour of work are both productivity measures. When output per worker increases, workers’ contributions to firms revenue increase causing demand for workers to increase also.
Support mental wellbeing in your workplace
In a similar vein, it is crucial that HR remains conscious of the mental health impact of the cost-of-living crisis, and be prepared to handle mental wellbeing issues that may arise as a result. Does your organisation have a designated mental health first aider, and if so, are all employees aware of their role?
HR should take care not to underestimate the value that well-placed mental health support can offer employees in difficult financial times. Above all else, HR should take the cost-of-living crisis as an opportunity to review existing employee wellbeing practices, lead with empathy, and prioritise feedback from employees who may be struggling.
Employee remuneration has been eroded
It is a known fact that at this stage, most employees are struggling to make ends meet given the devaluation of their salaries and rising inflation. The increase in inflation has greatly impacted both the employer and the employee, in this regard human resources people need to act and find common ground to ensure survival of employees and the organisation at large.
Emmanuel Zvada is an award-winning global HR practitioner and the managing consultant for 3rdeye Africa Consulting Group Zimbabwe and Namibia. For comments inbox or call +263771467441
