The analysis in this study done with financial support from the African Capacity Building Foundation (ACBF) reveals that unit labour costs and the public sector wage bill are generally high in Zimbabwe. The analysis also reveals that real wages are in fact flexible contrary to popular belief. While it can be argued that labour unions may constitute a significant source of labour market rigidities in Zimbabwe, evidence suggests that, as with the regulations on hiring, firing, and working hours, this is unlikely to be a significant barrier to the exapnasion of decent employment. If for no other reason, this is because unions represent a small and diminishing portion of Zimbabwe's labour force. Unions membership in the private formal sector is less than 20 per cent of total employment. Importantly, employers are able to resort to a number of strategies that include the use of contract employment.