HARARE — Zimbabwe’s formal economy entered 2026 with a striking divergence between incomes and employment, as real earnings rebounded sharply while the number of workers employed across covered industries remained below its 2024 benchmark.
The Zimbabwe National Statistics Agency’s (ZIMSTAT) first-quarter Employment Index shows formal-sector employment falling 1.2% year on year, with the industry-weighted Employment Volume Index at 99.1 in March, compared with 100.3 a year earlier. The index was also 0.9% below its Q3 2024 base of 100.
The figures suggest that Zimbabwe’s economic stabilisation is beginning to repair household purchasing power without yet generating a broad-based expansion in formal employment.
ZIMSTAT said employment across covered industries remained relatively stable during the quarter, with the index rising marginally from 98.9 in Q4 2025 to 99.1 in Q1. The agency noted that employment remained 0.9% below the base period.
The more significant movement was in earnings.
The industry-weighted Earnings Index rose to 168.9 in the first quarter, up 31.7% from 128.3 a year earlier and 29.5% from the final quarter of 2025. Real earnings also strengthened sharply, with the Real Earnings Index increasing 26% year on year to 91.7.
That left real purchasing power 8.3% below the Q3 2024 base, but represented a substantial recovery from the erosion experienced during 2025.
The data are consistent with a broader stabilisation narrative around Zimbabwe’s economy, where lower inflation and improved currency conditions have begun to give businesses and households greater visibility over costs and incomes. ZIMSTAT’s latest price data, for example, showed annual ZWG inflation at 3.2% in July 2026, while USD inflation stood at 3.1%.
Bloomberg has previously highlighted Zimbabwe’s efforts to restore macroeconomic stability and strengthen confidence in the local currency, particularly as authorities seek to reduce the economy’s dependence on the US dollar and deepen domestic financial markets.
For Zimbabwean businesses, however, stabilising prices is only one part of the recovery equation.
“An improvement in real wages is positive for consumption, but it does not automatically translate into employment creation,” an economic analyst who spoke to The Zimbabwe Financial Mail said. “Businesses will hire more people when they have confidence that additional demand can be sustained and that the cost of financing, energy and foreign exchange will remain manageable.”
The composition of the employment index illustrates the problem.
Wholesale and retail trade, which carries the largest weight at 28.6%, had an employment index of 95.5. Manufacturing stood at 96.3, transportation and storage at 90.1, financial and insurance activities at 93.4, while information and communication stood at just 84.3.
These sectors are particularly important because of their size and their links to the private economy. Wholesale and retail alone reduced the overall employment index by 1.3 percentage points, while transportation and storage contributed a negative 0.5 percentage points and manufacturing a negative 0.4 percentage points.
The weakness in those sectors outweighed gains elsewhere.
Electricity, gas, steam and air-conditioning recorded the strongest employment index at 205.7, more than twice its Q3 2024 base. Education contributed 0.3 percentage points to the overall movement, public administration another 0.3 and health and social work 0.2.
But the weighting of the index matters. Electricity represents only 0.38% of the employment basket, compared with 28.6% for wholesale and retail, 11.8% for mining, 10.7% for manufacturing and 9.4% for education.
Strong employment growth in a small industry therefore cannot compensate for job losses in large commercial sectors.
The underlying employee numbers reinforce that conclusion. Manufacturing employment declined from 80,500 workers in Q3 2024 to 77,500 in Q1 2026. Transport employment fell from 19,800 to 17,800, while financial services declined from 14,600 to 13,600.
Information and communication recorded one of the sharper contractions, with employment falling from 9,700 workers to 8,200.
Health, education and public administration moved in the opposite direction. Health employment increased from 56,800 to 64,900 workers, public administration from 135,000 to 141,600 and education from 181,900 to 187,100.
The pattern points to a labour market in which employment growth is being generated disproportionately by public and social services, while several commercially important private-sector industries have yet to return to their 2024 employment levels.
Mining provides another important example.
Despite substantial investment into Zimbabwe’s gold, lithium, platinum and other mineral projects, covered mining employment stood at 31,600 in Q1 2026, compared with 31,500 at the Q3 2024 base. Its employment index was consequently only 100.5.
“Mining investment is important for foreign-exchange generation and capital formation, but the employment multiplier is not necessarily large,” a second analyst told The Zimbabwe Financial Mail. “The challenge is to move further down the value chain so that mining investment creates additional jobs in processing, manufacturing, logistics and related services.”
That distinction is increasingly important for Zimbabwe’s industrial policy.
Mining can generate substantial export earnings and investment without producing a proportionate increase in formal employment. Manufacturing, by contrast, has the potential to connect domestic demand, investment and employment across food processing, consumer goods, packaging, metals and other supply chains.
Yet manufacturing’s employment index remained 3.7% below its Q3 2024 base.
The earnings figures also reveal a potentially important productivity story.
Financial and insurance activities recorded an earnings index of 689.3, the highest among the covered industries, with average quarterly earnings reaching about ZiG401,700 in Q1. Yet the sector’s employment index was only 93.4.
The divergence between remuneration and headcount could reflect wage adjustments, skills shortages, changes in workforce composition, productivity improvements or a combination of these factors. The employment index alone does not establish which explanation dominates.
For companies, the implication is that the recovery in real wages could eventually become an important source of domestic demand.
Workers whose purchasing power is recovering are better positioned to spend on food, transport, housing, education, financial services and consumer goods. That can strengthen revenues for businesses, particularly in retail and services.
But the transmission from stronger household purchasing power to employment depends on whether companies believe the increase in demand is durable.
Zimbabwe’s formal labour market also sits within a much larger informal economy. ZIMSTAT’s economic census found that 76.1% of the 204,798 operational establishments identified were informal, highlighting the limitations of using formal-sector employment data as a complete measure of livelihoods or economic activity.
ZIMSTAT itself maintains separate labour statistics through its Quarterly Labour Force Survey and administrative employment data, reflecting the importance of distinguishing establishment-based formal employment measures from the broader labour market.
For policymakers, the Q1 employment figures therefore present a more nuanced picture than either a simple recovery or deterioration narrative.
The economy is restoring purchasing power, but the recovery has not yet translated into broad-based formal job creation.
That places the emphasis on the next stage of economic policy: converting macroeconomic stability into productive private-sector expansion.
Businesses need reliable electricity, access to working capital, predictable foreign-exchange conditions, stable taxation and sufficient domestic demand before stronger revenues can translate into sustained recruitment. Manufacturing and tradable services will be particularly important because they can create employment beyond the relatively narrow job footprint associated with large capital-intensive projects.
“The real test of the recovery is whether firms begin adding employees rather than simply paying existing employees more,” the first analyst said. “That is when stabilisation becomes a broader employment recovery.”
For Zimbabwe, that distinction could prove decisive.
Real earnings rose 26% year on year in the first quarter, providing evidence that the income shock of the previous period is being partly reversed. But formal employment remained 1.2% below its year-earlier level and marginally below its Q3 2024 base.
The next phase of the recovery will therefore be judged less by how quickly wages recover than by whether Zimbabwe can turn stronger purchasing power, investment and macroeconomic stability into more productive firms, larger payrolls and a wider formal tax base.
