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Press statement by R Khumalo, CEO Zimind Publishers (Pvt) Ltd.
Zimbabwe Independent
January 25, 2008

http://www.theindependent.co.zw/viewinfo.cfm?linkid=11&id=12217&siteid=1

Background
On the 25th June 2007, the Minister of Industry and International Trade ordered all providers of goods and services including newspapers to reduce prices by half and revert to prices that were in place on the 18th April. This order did not however apply to wages and salaries. It was only after the establishment of the National Incomes and Pricing Commission in August that it became possible to vary prices after submitting an application and providing suppliers' invoices. Even then the maximum mark-up businesses can add to input costs is 20% which is way below the rate of inflation.

Whilst this order applied to some, to others like importers of fuel, film, inks, plates, and other service providers like garages and commuter omnibuses, the order was simply ignored and those charged with its enforcement too busy to do anything about it. It is fair to say that the order remains applicable only to some goods that are "visible" to the authorities. Thus on the 9th November 2007 the authorities had no difficulty arresting myself and Jacob Chisese, chief executive officer of the Financial Gazette, for violating price control regulations after increasing cover prices of our newspapers in an attempt to recover costs so that we could remain in business and allow our employees to earn fair returns.

The authorities obviously did not see it that way as readers of newspapers are treated like consumers of milk, bread and cooking oil. At the time I wrote that running independent newspaper operations in Zimbabwe was like running a race with both hands tied behind one's back. Inspite of all this the company had to absorb cost increases all round including salaries with no matching revenues as cover price increases fell well below cost movements.

At the same time following government's ill-advised policy directive of June, which had resulted in the wanton looting of retail outlets, we had lost nearly 40% of advertising revenue as major retailers had either run out of stock, scaled down operations or simply closed shop. In the period after Christmas our traditional advertisers could not even put up "Sale" signs that are the norm for this period. Between January and December employees were given monthly salary increases that resulted in our overall salary bill for the year going up by 500%. In addition the group was able to pay all its employees a bonus inspite of serious trading difficulties. In a hyper-inflationery environment such as ours, where the last official inflation figure of 7982,82% was issued in September 2007, these salary movements have no relavance to today's situation as they have been eroded by inflation which the International Monetary Fund now estimates to be 150 000%.

What was offered
On Wednesday the company made the following offers to its employees:

1. a 200% salary increase.
2. an increase in company medical aid contribution of 90%, up from 75%.
3. an increase in the transport allowance by the same percentage as salaries.

This offer was rejected by employees resulting in them staging a walk-out. For their part employees were demanding a 2 000% salary increase.

Having taken further cognisance of spiralling inflation and at the risk of running down newspaper operations, the company made this final offer:

1. a salary increase of 600%.
2. a minimum salary of $200 million for the least paid employees.
3. a transport allowance of $66 million net of tax.
4. an increase in company medical aid contribution to 90%, up from 75%.

The company made a further undertaking to review salaries in March subject to trading conditions prevailing at the time.

After this offer had again been rejected the group, in compliance with the law, made an application for a show cause order at the Ministry of Labour. By this time employees were demanding a 1 000% salary increase.

Following the application a hearing was then held on Friday at the ministry's offices where members of the workers committee together with their legal representative were present. After fairly long deliberations the parties signed a certificate of settlement having resolved by agreement the following:

• employees to return to work whilst negotiations continued.
• employees not to be subjected to disciplinary hearings as a result of their illegal action.
• employees that took part in the job action would not be paid for their time away from work.

Civic duty
Whereas the group is commited to the welfare of its employees it however recognises that affordable transport, housing, medical care and education for children are rights that every Zimbabwean is entitled to and can never be solved in the workplace.

Conclusion
Throughout the negotiation process management has been transparent and tried in vain to explain the company's financial predicament in the context of Zimbabwe's economic crisis which has been compounded by the following: price controls targeted at newspapers, loss of advertising revenue, high operating costs, cost of machine breakdowns, foot dragging by authorities in granting price increases even in the face of spiralling hyperinflation as well as reduced newspaper circulation figures due to the unavailability of cash.

We remain open to negotiation but deplore walk-outs during the negotiating process. We also need to emphasise that as a business we have a duty to keep the company functioning to provide our readers and advertisers with news whilst addressing the needs of our employees and their families.

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