Solving employment challenge requires a paradigm shift

We are currently in an economic crisis that is overwhelming society. The essence of the global crisis was neatly captured in the theme for the 2018 World Economic Forum (WEF) meeting in Davos: Creating a shared future in a fractured world.

On December 16 1974, the New York Times wrote: “When emerging crises first beset a society, there are calls for it to do a better job of following the ways of tradition. Large-scale tinkering with the system almost always follows.

“If this does not work, breakthroughs in basic approaches must next be sought. But making such breakthroughs inevitably involves a re-examination, and often a restructuring, of fundamental assumptions and mental maps that underlie conventional wisdom.”

We seem, at this point, to be out of options to remedy our economic woes. What is needed is a whole new way of looking at things.

In SA, recent reports by Oxfam and the World Inequality Lab confirm that we have one of the most unequal societies in the world, and that the situation is worsening.

We therefore have a greater need than most for an economic system that shares wealth.

Wealth will be shared when all job seekers have a job, excesses in executive pay are removed and our minimum wage reflects a living wage.

To achieve all of this is possible if we shift the paradigm. A new economic system that has the capacity to deliver prosperity for all and create a shared future needs to be embraced.

In this new system, realising full employment would probably present the biggest challenge.

If employment can be solved, the remaining challenges around executive pay and the minimum wage should be solvable.

The first step towards full employment requires that the purpose of corporations be realigned to reflect the improved economic purpose of delivering prosperity for all.

Corporate purpose currently focuses on maximising a host of financial metrics that measure performance, growth and sustainability. In a new dispensation, this purpose could be restated as: to function as engines of the economy dedicated to bringing about prosperity for all.

This would place corporates firmly on the line to play a significant role in optimising job creation. To do this they will have to think outside the box and find new ways of creating jobs. It is generally accepted that the current set of job creation initiatives being driven by business, labour and government will not bring about full employment.

These efforts will therefore need to be supplemented by major interventions with the capacity to turbo boost job creation.

One such intervention could be for each corporate to set up a new department within their company dedicated to finding and starting up micro enterprises.

The aim would be to utilise corporate staff and their expertise to get micro businesses off the ground and then pass ownership on to the new entity, at a nominal cost. Business has the expertise to succeed at this, where nongovernmental organisations operating in this space have failed for years.

During the disinvestment campaign of the 1980s, US firms were required to implement the Sullivan Principles as part of their social responsibility efforts. Adopt a School was one of these programmes.

IF EMPLOYMENT CAN BE SOLVED, THE REMAINING CHALLENGES AROUND EXECUTIVE PAY AND MINIMUM WAGE SHOULD BE SOLVABLE

The proposed job creation intervention could, in similar vein, be named Start a Business. Start a Business, plus the other job creation initiatives would take care of inorganic job growth.

However, corporates have the ability to do more with regard to organic job growth.

A 15-year longitudinal study by McKinsey, published in February 2017, reveals that long-termism optimises job creation.

The study, which ran from 2001-15, involved 651 nonfinancial US companies (60% to 65% of the total US market cap) and found that the longterm focused companies surpassed their short-term focused peers on several important financial and economic measures, not least of all was the growth in jobs.

In a new dispensation, corporates would become the engines for job growth, which is the main driver in achieving prosperity for all and a shared future.

A long-term corporate focus will, inter alia, assist with the realignment of executive pay.

Regarding the minimum wage challenge, it will look after itself as corporates become more prosperous.