eBusiness Weekly
Tapiwanashe Mangwiro
Zimbabwe is on the brink of a wave of old-age poverty in the current working generation that according to the Zimbabwe National Statistical Agency’s latest report, is not only employed mostly in the informal sector, but is also informally employed.
An informally employed person does not contribute to NSSA and does not have a contract of employment according to ZimStat.
The root of this argument lies in the staggering statistic that nearly half of the country’s labour force is employed within the informal sector, with no safety nets of social security to rely on during retirement years.
“The informal sector (non-agriculture) comprised 43,7 percent of the employed population, and the agriculture sector accounted for 22,3 percent (out of total employed population),” the latest report reads.
Further, informally employed persons were 86,8 percent of all employed persons, according to ZimStat.
“Of all persons employed in non-agriculture sectors, informally employed persons constituted 83,8 percent,” stated ZimStat in a media briefing.
Such a predicament paints a grim picture of the future for many Zimbabweans and calls for urgent attention from policymakers, economists and society at large.
Dominance of the informal sector in Zimbabwe’s labour force although sometimes celebrated, has far-reaching implications, particularly concerning retirement and old-age social security.
It has also emerged that even some workers in the formal sector face same predicament as a number of firms have since disbanded pension schemes arguing values have for years been eroded by inflation.
Analysts say with a significant portion of the population engaged in informal activities such as street vending, small-scale farming and artisanal mining, traditional avenues for retirement savings, such as pension schemes and other formal employment benefits such as medical insurance and loans, are often inaccessible or non-existent.
As a result, workers in the informal sector are left vulnerable to financial insecurity in their later years when they will be prone to many health-related challenges.
Without a reliable source of income post-retirement, many elderly Zimbabweans face the prospect of destitution, unable to afford necessities such as food, shelter and healthcare.
This not only threatens the well-being of individuals and families, but also places strain on social welfare systems and exacerbates existing inequalities within society.
Furthermore, the lack of social security provisions perpetuates a cycle of poverty, as elderly individuals may be forced to rely on support from family members who are themselves struggling to make ends meet.
This places additional burdens on younger generations, hindering their ability to pursue education, employment and economic mobility.
Analysts believe that addressing the issue of old-age poverty in Zimbabwe requires a multifaceted approach that acknowledges the complexities of the informal sector and its integration into the broader economy. However, several key challenges stand in the way of implementing effective solutions.
Economist, Tinevimbo Shava said, transitioning workers from the informal sector to formal employment presents logistical and regulatory challenges.
“Many informal businesses operate outside the purview of Government oversight, making it difficult to enforce labour standards, taxation, and social security contributions,” he said.
“Establishing accessible and affordable retirement savings mechanisms for informal sector workers is essential but challenging. Traditional pension schemes may be impractical or unaffordable for individuals with irregular or low incomes, necessitating innovative approaches to financial inclusion and literacy.”
Zimbabwe’s economic volatility and inflationary pressures further complicate efforts to address old-age poverty.
Fluctuations in currency value and purchasing power erode savings and undermine long-term financial planning, leaving retirees particularly vulnerable to economic shocks.
Commenting on the issue, economist Dr Prosper Chitambara noted; “The prevalence of informal employment in Zimbabwe underscores the need for comprehensive social protection policies that extend to all segments of the population.
Prioritising investments in education, healthcare and infrastructure can empower informal workers and lay the groundwork for sustainable economic development.”
Another economist, Gladys Mutsopotsi-Shumbambiri said; “Effective collaboration between government, civil society and the private sector is essential for addressing the systemic barriers to retirement security faced by informal sector workers.
“By fostering an enabling environment for entrepreneurship and innovation, Zimbabwe can unlock the potential of its informal economy while safeguarding the well-being of its aging population.”
Renowned economist Professor Tony Hawkins, weighed in and said; “While formalising the informal sector is a laudable goal, policymakers must tread carefully to avoid unintended consequences such as job displacement or increased inequality.
“Targeted interventions that promote skills development, access to credit and social protection can empower informal workers to transition into more secure and sustainable livelihoods.”
The spectre of old-age poverty looms large, fuelled by the prevalence of informal employment and the absence of social security protections.
To avert this crisis, concerted efforts are needed to formalise the informal sector, expand access to financial services and strengthen social safety nets for vulnerable populations.
Failure to act risks consigning future generations to a fate of hardship and deprivation, underscoring the urgency of addressing old-age poverty as a top priority for policymakers and society as a whole.
