Actions needed from business to help its pledge gain traction

Good news on the economic front has been a scarce commodity for a few years, but there have been two bits of good news in the past two weeks.

The economy grew 2.5% in the second quarter, which is good news because high rates of economic growth make it easier for SA to solve its socioeconomic problems.

Even with economic growth, however, the country has failed to create enough jobs.

The problem is getting worse daily. About 48,000 jobs were lost in the first three months of 2017, and two mining houses are planning to retrench more than 11,000 workers.

Food costs are high; transport is expensive, often dangerous and unreliable; wages are low; the wage gap is exorbitant and young people are justifiably frustrated with their prospects.

Business, though, appears through the recent pledge announced by Business Leadership SA’s Bonang Mohale to be in the process of making a firm commitment to building a strong and inclusive economy. The pledge is partly a response to the smear campaign against “white monopoly capital” by those whose only interest is state capture.

While everyone should support the pledge to invest in and grow the economy, the difficult question of why this has not been done over the past two decades should be asked. Furthermore, how can it be ensured that this pledge is meaningful?

The following actions from business that will help the pledge to gain traction are needed:

More is required from business on how it intends to enforce the pledge. What action will business take against members that sign the pledge but do not abide by it?;

It should implement economic and social policies that tackle ownership, employment and long-term economic growth. Business often decries a lack of policy stability, and rightly so, but it must ensure that it is proactive in implementing good policy, too — policy that serves the national interest and not only narrow self-interest. Business should also spell out which of the existing policies it supports and which it does not. It must be careful that the pledge does not lead to more policy prescriptions that are never implemented. Much of what needs to be done, for example in areas such as small business development, requires action and implementation, not more policy;

It should share with the country its strategy to deal with corruption. For too long corruption and state capture have been projected as a problem of government. But through the Gupta leaks e-mails, it is becoming clear how deeply involved in corruption some national and international businesses are. Business leaders need to be clear about how they intend to end corruption and what sanctions they will take against their own members and people in the business community to excise the rot;

It should state what actions will be taken to tackle the high levels of inequality in SA. Is it willing unequivocally to support the national minimum wage with strong public statements around its importance and value, as well as mechanisms to deal with those businesses that refuse to comply?; and

It should think about a moral regeneration project that starts with a serious reflection on the wage gap. The same leaders who are asking the country to recognise the commitment of business to growth and transformation must be the people who publicly acknowledge the immorality of living in a country with 34% unemployment where 47% of workers earn less than R3,500 monthly, yet where CEOs continue to take home unjustifiably exorbitant salaries monthly.

BUSINESS SHOULD THINK ABOUT A MORAL REGENERATION PROJECT THAT STARTS WITH A … REFLECTION ON THE WAGE GAP

The minimum wage debate has generated much discussion about the low end of the wage distribution, and for good reason. But it should be acknowledged that the higher end of the labour market is also seriously broken. Executive and senior management pay is exorbitant — indeed, high-earning South Africans are some of the best-paid employees in the world. Measures to tackle this must go beyond tokenism.

A commitment is needed from business to reduce the wage gap by increasing the wages of the lowest paid and dealing with excessive executive pay.

Business has an opportunity to implement practices that will not only make a significant difference to how this country operates, but send a strong message to South Africans that the business community is indeed committed to building a better future for everyone.