The Impact of Electricity Supply on Labour Productivity in the Wooden Fittings Sector: A Case of Africa Construct in Zimbabwe

Abstract

The constant availability of electricity plays an important and dynamic role in both production and consumption of goods and services. Electricity supply plays a crucial role in the production and consumption of goods and services. This dissertation presents a case study conducted at Africa Construct, a firm in the wooden fittings industry sector in Zimbabwe, to investigate the impact of electricity supply on labor productivity. The primary aim was to assess the relationship between electricity supply and labor productivity, specifically focusing on the years 1991–2021 to estimate the impact of electricity shortages on firm productivity in Zimbabwe. Utilizing a combination of the Cobb Douglas Theory and the Real Business Cycle Theory, the study analyzed the variables of electricity supply, labor productivity, manufacturing employment, materials, and inflation rates. A sample of 156 individuals was drawn from the organization through the Simple Random Sampling Method, representing different departments. The collected data was then analyzed using the SPSS package to determine statistical proportions. The study adopted a mixed method research approach, combining the concepts of CVAR Co-integrated Vector Auto Regression as an estimation technique. The analysis revealed a positive long-term relationship between labor productivity, manufacturing employment, electricity supply, and inflation rates. However, no significant relationship was found between labor productivity and materials acquired. These findings suggest that electricity supply and manufacturing employment contribute to bringing labor productivity to equilibrium. It is recommended that policymakers focus on formulating and implementing policies aimed at promoting and expanding the electricity sector in Zimbabwe to boost the manufacturing sector and create more jobs in the country. Moreover, the study recommends the improvement of regulatory and investment frameworks for the power sector to attract private capital for new generation capacity, based on the positive relationship between electricity supply and labor productivity. These recommendations align with theoretical predictions and are supported by previous studies. Future research areas suggested include forecasting and interpolation using VARs with common trends, as well as studying the behavioral impact of power outages on developing countries. In conclusion, this dissertation sheds light on the critical role of electricity supply in the wooden fittings industry sector in Zimbabwe and provides valuable insights for policymakers and stakeholders to enhance labor productivity and economic growth.