• ZIMSTAT data show wage recovery running ahead of labour absorption, with retail, transport and manufacturing keeping employment below the 2024 base
• Formal-sector real earnings jumped 26% year-on-year in Q1 2026 as wages adjusted for inflation, even as overall formal employment slipped 1.2% year-on-year
• High-weight private sectors dragged down employment, wholesale and retail trade, manufacturing, and transport all contracted, while public services
• Key economic drivers like mining and finance saw stagnant or shrinking workforces despite high earnings and capital investment, emphasizing that economic recovery is restoring worker purchasing power faster than it is creating formal jobs

Harare- Zimbabwe’s covered formal-sector employment contracted by 1.2% year on year in the first quarter of 2026 even as workers recorded a sharp recovery in earnings, exposing an economy that is rebuilding purchasing power faster than it is creating additional formal jobs. The industry-weighted Employment Volume Index closed Q1 at 99.1, down from 100.3 a year earlier and still 0.9% below the Q3 2024 base. 

In its Q1 2026 Employment Index report, the Zimbabwe National Statistics Agency said employment remained broadly stable across covered industries, with the index increasing only 0.2% from 98.9 in the final quarter of 2025. The limited quarterly recovery left formal labour absorption essentially where it was when the index series began in Q3 2024. 

“Employment levels across the covered industries were 0.9 percent below the base period level,” ZIMSTAT said. The agency described movements around the 100-point base as relatively stable, though the underlying sector data show that employment growth remains concentrated in a small number of industries. 

The stronger movement came through wages. The industry-weighted Earnings Index climbed to 168.9 in Q1 2026, up 31.7% from 128.3 a year earlier and 29.5% from the final quarter of 2025. Nominal employee earnings were therefore almost 69% above the Q3 2024 base by March. 

Inflation absorbed part of that gain. ZIMSTAT’s Real Earnings Index reached 91.7, rising 26% year on year and 28.4% from Q4 2025, leaving purchasing power 8.3% below its Q3 2024 starting point. Workers experienced a substantial recovery during the opening quarter of 2026, with the real value of earnings still short of the level recorded before the subsequent erosion in 2025. 

The combination creates an important distinction in Zimbabwe’s economic recovery. Wage adjustment is repairing part of the income lost to inflation, and formal businesses are not yet expanding payrolls at the same pace. For households, the first movement improves consumption capacity among people already employed. For the broader economy, durable employment growth requires firms to add workers as production, investment and demand expand.

The sector composition explains why aggregate employment has struggled to move above its starting point. Wholesale and retail trade, which carries the largest weight in ZIMSTAT’s employment index at 28.6%, recorded an employment index of 95.5. Manufacturing stood at 96.3, transportation and storage at 90.1, financial and insurance activities at 93.4, and information and communication at 84.3. 

Those sectors matter because they occupy larger and commercially important parts of the formal economy. Wholesale and retail trade alone contributed negative 1.3 percentage points to the movement in the overall industrial employment index, followed by transportation and storage at negative 0.5 and manufacturing at negative 0.4. Their combined drag outweighed employment gains recorded in several smaller or public-service-linked industries. 

Electricity, gas, steam and air conditioning recorded the strongest employment index at 205.7, more than double its Q3 2024 base. Education contributed 0.3 percentage points to employment growth, public administration another 0.3 and health and social work 0.2. Electricity also contributed 0.4 percentage points. 

The relative weights limit their ability to change the national outcome. Electricity carries only 0.38% of the index, compared with 28.6% for wholesale and retail, 11.8% for mining, 10.7% for manufacturing and 9.4% for education. Strong hiring in a very small sector therefore has a much smaller aggregate effect than weak employment in retail or manufacturing. 

Actual employee counts in the appendix reinforce that pattern. Manufacturing employment fell from 80,500 in Q3 2024 to 77,500 in Q1 2026, transport declined from 19,800 to 17,800 and financial services moved from 14,600 to 13,600. Information and communication declined from 9,700 to 8,200 over the same period. 

Health employment moved in the opposite direction, increasing from 56,800 workers in Q3 2024 to 64,900 in Q1 2026. Public administration rose from 135,000 to 141,600, with education increasing from 181,900 to 187,100. The labour market has therefore been absorbing more workers in health and public services at the same time that several private-sector industries remain below their 2024 employment levels. 

Mining, one of Zimbabwe’s major investment and export sectors, has so far generated limited net employment expansion in the covered establishments. Employment stood at 31,600 in Q1 2026 against 31,500 in Q3 2024, producing an industry index of 100.5. Large investment flows into gold, lithium, platinum and other minerals have therefore preserved formal mining employment without producing a material increase in headcount across the period captured by ZIMSTAT. 

Manufacturing presents a more demanding policy test. The sector is central to Zimbabwe’s industrialisation ambitions because it can convert investment and domestic demand into employment across food processing, consumer goods, packaging, metals and other value chains. An employment index of 96.3 places manufacturing 3.7% below its Q3 2024 base, leaving job creation yet to catch up with the broader recovery in economic activity. 

The earnings data add another layer to the divergence. Financial and insurance activities recorded an earnings index of 689.3, the highest across all covered industries, with average quarterly earnings reaching ZiG401,700 in Q1 2026. The sector’s employment index stood at only 93.4 and its workforce was smaller than at the Q3 2024 base. 

That pattern raises a wider productivity question. Higher earnings can accompany greater output per employee, skills scarcity, wage adjustments or changes in workforce composition. The ZIMSTAT index does not provide enough information to separate those drivers, leaving productivity, automation and the distribution of remuneration as areas requiring sector-level investigation.

Zimbabwe’s policy challenge consequently extends beyond restoring wages. Real earnings approaching their 2024 purchasing-power level improve employee welfare, though an economy with a largely unchanged formal employment base cannot distribute those gains to a significantly larger workforce through jobs.

Businesses need sufficient demand, reliable power, manageable financing costs and predictable currency conditions before stronger revenues translate into additional hiring. Industrial investment also needs to reach labour-intensive segments capable of creating jobs beyond the construction and commissioning stages of major projects.

The report itself carries an important limitation. ZIMSTAT excludes agriculture, forestry and fishing because consistent quarterly establishment data were unavailable, and its methodology does not fully capture Zimbabwe’s extensive informal economy. The results therefore describe employment and earnings movements within covered establishments and cannot be treated as a complete measure of national employment. 

That limitation makes the formal-sector trend more relevant for policy rather than less. Formal employment determines a substantial portion of taxable wages, pension contributions, bankable household income, structured employee benefits and the consumer base available to organised businesses.

The Q1 numbers place Zimbabwe’s labour recovery at a clear point. Earnings are repairing rapidly, with real pay rising 26% year on year. Formal employment remains 1.2% below its level a year earlier and marginally below the Q3 2024 base. 

The next stage of economic recovery will have to broaden from income restoration into labour absorption. Retail, manufacturing, transport, finance and communications carry enough weight to move the national employment index materially, making expansion in those sectors central to converting economic growth into a larger formal workforce.

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