Allowances and rebates solve fuel prices

18 Jan, 2019 - 00:01 0 Views

eBusiness Weekly

Many businesses were caught by surprise on Monday by the organised political action to try and close down the economy for three days following the announcement of fuel price increases late on Saturday along with details given on Sunday of how the rebate system for registered businesses would work.

Most shops, factories and offices opened normally on Monday only to get frantic messages from staff living in high density suburbs that touts were blocking transport and then getting their own threatening messages. Most did have to close, although some, especially in the most vulnerable high density suburbs, were then hit by looters.

The organisers of the shut-down claimed they were following a directive from the Zimbabwe Congress of Trade Unions, although that call was not in compliance with the ZCTU’s own rules, let alone national labour rules that require notice to be given for a strike, in this case a general strike. The ZCTU’s rules require the affiliated unions to be polled before any such strike action, and they in turn would have to consult their membership. None of that happened. A small group made an extra-legal decision.

The damage to the formal sector will vary. Businesses dealing in processing perishable food, such as bakeries and some other agricultural entities, will have lost business that cannot be regained. The tourism sector, comfortably rebuilding, has had yet another unnecessary knock. But many retailers opening on Thursday faced the problem of coping with a major surge in business; factories can normally work with their staff to boost production for a while to fill order books. This catch-up in sales in production will help ease the effect of the action, although not eliminate it.

The informal sector, which is now very large, will be hit far harder since so much of the activity there is time urgent and often based on services. Many in this sector will never recover the losses they made in the three days.

For business, there were far more effective responses to the fuel price rises, responses that responsible trade unions would have been urgently pressing for. For a start, the Government policy is to refund the extra duty levied from Sunday for pure business fuel purchases.

Businesses would generally be only wanting these rebates to be made promptly, and preferably by the same time they have to forward VAT and PAYE payments. Pressure from business bodies would have been applied on the Finance and Economic Development Ministry, and still should be applied, to ensure that an effective and speedy system is quickly put in place.

Most business owners and managers, hearing the news on Saturday evening or reading about it on Sunday immediately grasped that they would be needing to work with their employees on how to cover the resulting higher transport costs. Few businesses or business sectors would have refused to enter these negotiations. Transport allowances would obviously have to rise and the question would simply be by how much.

The rise in kombi fares from November had already been taken aboard in discussion over temporary hardship allowances or payments. There is, of course, a lot of doubt over kombi fares. These fluctuate sharply depending on how whether drivers have to go through the black market and over how much competition there is on a particular route at a particular time if a significant percentage of kombis are in fuel queues.

The new prices are lower than the black-market prices, so if they lead to readily available fuel with little queuing then kombi prices can be fixed by market forces in a competitive environment.

Most employers do calculate the basic transport allowance on a single or double return fare each working day. On practical matters, they obviously want the workers at work and on rational matters they understand that a worker cannot spend half her salary just getting to work.

A responsible trade union movement would have been applying pressure to ensure employers did enter serious talks on transport costs, and would at the same time be keen on seeing the Government requirement for rebates being predicated on no price rises.

Interestingly the new fuel prices, with rebates, opens up the opportunity for investment in proper public transport.

If we had an efficient public transport service obviously fares would not rise, since the bus company would be heading the list for rebates on fuel. In fact that operation, with tankers going into the depots, would probably have the fuel paid for at the rebated price. All that company would have to do is ensure no rebated diesel was put into the tanks of a manager’s assigned car or 4×4.

Theoretically it could even be possible to organise kombi fleets to receive rebated fuel, but this would be difficult with the present wide dispersal of vehicle ownership and the separation of owners and drivers. Drivers are self-employed skilled people who hire the buses by the day. It is a workable arrangement but the rebate system would need considerable tweaking to cope and the opportunities for cheating would be high. But again it would be useful if a serious attempt was made to think through a workable system to keep fares down.

Obviously with political decisions, like an instant call for a strike, entering the economic world businesses are going to have to put in place better contingency plans.

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