Making an economy grow and creating jobs will take specific changes to the economy. Wanting to create jobs will do nothing. Setting the goal of job creation will create nothing, and even developing a document with the words “New Growth” or “Jobs” in the title will do nothing either. I’ve had three conversations recently with three business leaders who are at the top of the pile in their respective industries. Two of the companies are medium sized and one is large. All three would be classified as previously disadvantaged: black male middle aged; Indian male, middle aged; Chinese female middle aged. All three believe that the economy is over regulated and all three have ideas about what needs changing. Let’s examine these three examples to point out specific policy and legislation that needs to be changed to cause them, and many other senior business leaders like them, to employ more people (the right people) to make their companies grow, and in so doing help alleviate the unemployment problem.
The first conversation was with the Indian male who has built a successful medium sized company from scratch in the electrical industry with a R200 million per annum turnover. He is extremely successful, having gone on his own after being a BEE partner in another firm. His company has recently been subject to strike action and experienced union violence first hand at the factory gate. I asked him whether he would be prepared to take on more staff and under what circumstances he would be prepared to do so. He responded with three points:
1. Collective bargaining must go. The presumption inherent in collective bargaining is that all workers at a particular level are equal and deserve pay. This is simply not true. Productivity verses laziness is a key factor. Workers need to be paid according to contribution to the business and the product.
2. Productivity must be pushed up. Workers have an entitlement attitude – you owe me something as an employer. There is no respect for the workplace or the need to be productive. Attitude may be hard to quantify but it affects the work environment and rubs off on colleagues.
3. Shifts must be re-introduced in order to sweat the assets, turning the production cycle twice in a 24 hour period instead of once. The overtime regulations make it difficult for employers to run a good shift work programme. This will also distribute the electricity load on Eskom throughout the day.
The second discussion I had was with the Chinese South African woman. She co-runs a family business in the chemicals industry. She made a comment that will stick in my mind. She was discussing the problem with hiring and firing of staff and said: “In this country, it is easier to divorce your wife than to fire a lazy employee”. The point she was making has been made by others: until employers are able to fire lazy or dishonest workers, they will be reluctant to employ additional workers. Not all welders are equally productive or enthusiastic or punctual. If you cannot weed out those who are a liability or cost the company more than they produce, they make the South African workforce unproductive by international standards and push up the price of our products. Employers seem reticent to employ more people than absolutely essential until they can weed out the bad eggs. We should probably lengthen the period of probation and make greater use of apprenticeships also.
The final discussion I had was with a black entrepreneur in the mining sector, who is a senior leader of an extremely successful, large, black-owned mining company that was started as a greenfield development. There was no taking over shares or fronting. This is the real deal. I met him on the plane to Cape Town and we chatted for two hours.
I asked the mining magnate what he would do about our problem of empowerment and unemployment. His first reaction was – shut down the employment equity legislation. He believes that it is mere box-ticking and window dressing, and preventing the right people from being employed in the right positions. Instead he believes that black entrepreneurs like himself should be given support and tax breaks by the government for taking all of the risk and for employing thousands of people on new ventures. He decried the lack of support for entrepreneurs and SMMEs. With the background of the risk and difficulty in starting a new venture that is labour intensive, one can see why he made those remarks.
Richard Pike, Loane Sharp and Ted Black in their new easy-reading book on the South African unemployment problem “The New Divide”, make the point that if we want to sort out our economic problems, we have to have one goal: creating jobs – “two objectives is no objective”. If we want to end unemployment, we are going to have to focus relentlessly on job creation and all agree that that is our most important target. We cannot aim the economy at achieving all things to all men. This will result in endless naval-gazing. The three business leaders are illustrating the constraints on business that are keeping the unemployed out of work. Legislators would do well to listen.
Unfortunately the tripartite alliance has too many special interest groups and too many constituencies that need placating, thus policy often becomes a dead-end street. The left and the centre will seldom agree and the compromise is seldom practical or focused. Did I ever tell you the one about a horse designed by a committee…? DM
Ollis is a DA MP. You can find him on twitter at @ianollis.