Mozambique: Employers suggest suspension of employment contracts for six months

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Mozambique: Employers suggest suspension of employment contracts for six months

7:04 CAT | 30 Mar 2020

File photo: Lusa

The Confederation of Mozambique Economic Associations (CTA) suggested the suspension of employment contracts for six months, with the replacement of salaries by subsidies, to support the companies most affected by the Covid-19 pandemic.

Tourism, civil aviation and agriculture will be the sectors most affected, anticipates the main Mozambican employers’ association, in a study that Lusa had access to on Monday, in which it suggests that subsidies be financed by cooperation partners.

“It is proposed to suspend employment contracts in these sectors for a period of six months, subject to extension depending on the evolution of the pandemic in the coming months,” the CTA said in a document prepared with support from USAID.

The measure to suspend contracts (lay-off) is provided for in the law, but the confederation argued that this time companies should stop paying salaries 100%.

“To avoid the social impacts that this measure could have, it is proposed to approve a subsidy package for workers,” covering all salary expenses, which could amount to €44.4 million.

The CTA suggested mobilising funds from the cooperation partners to cover this volume of the wage bill during the six months of the lay off, to ensure the survival of companies and the maintenance of jobs and living conditions of workers”.

The institution also advocates fiscal, customs and financial measures applicable to all economic sectors and which should be implemented according to the warnings of the level of risk of the Covid-19 pandemic.

In total, the package of immediate measures to be implemented for the priority sectors proposed by CTA costs €322.3 million.

The perspectives outlined in the study were obtained through interviews with 118 companies.

The employers’ confederation recommends to the Bank of Mozambique a cut in the monetary policy interest rate, resulting in an increase in liquidity in the economy, at a time when banks are afraid of releasing liquidity because of the risk situation caused by the spread of the Covid-19 pandemic.

In Mozambique, eight cases of this disease are confirmed.

The number of deaths in Africa has risen to 148, with cumulative cases approaching 5,000 in 46 countries, according to the latest pandemic statistics.

Source: Lusa