Business not the enemy
TIME FOR SOME PERSPECTIVE Government and unions thought business was a giant cow made for milking – the data says otherwise.
Ongoing negative comment about business leaders on matters like the disproportionately high income the select few receive, has never been offset by acknowledging that the typical employer earns only R8 000 a month, versus the R3 200 received by the typical employee.
It’s easy to slam business by reporting on the R3 200-a-month figure, versus the few million a month earned by the multinational chief executive officer.
There’s no appreciation that the one figure is derived from South Africa’s survey data, while the other relates to a few select big companies whose bosses often don’t even live in the country.
There’s no context: surveys indicate that as a rule, employers work 40% longer hours per week and that, in relation to their risks, R8 000 per month isn’t excessive. The typical employer is at least a decade older too.
There’s no reporting that the typical self-employed person earns less than the typical employee. Survey data shows mining and utility sector employees earn more than the typical employer.
Government documents show that more than 75% of government employees earn more than the typical employer. For years, South African business has struggled. Turnover growth for the year to June was equal to inflation, so no real growth happened. Most businesses could have made a better return in the bank had they sold their assets at book value.
Employer numbers declined, as did the number of self-employed. But the number of unemployed grew – from 6.4 million to 9.8 million people.
Making money is difficult. Most businesses (that actually start trading) don’t last longer than five years.
Unemployment Insurance Fund figures show the average number of people employed per formal enterprise has declined – from 34 per commercial enterprise in the 1980s to 8.8 per employer in 2016.
The typical employer has three to five employees and is struggling to meet its obligations all of the time.
Statistics SA data shows that only 3.6% of South Africa’s population are employers (2008: 4.4% and in 2002: 4.7%). This is one of the lowest numbers in the world and certainly contributes to unemployment. More often than not, the rules in South Africa are designed for a business with hundreds, if not thousands of employees.
Business rules and requirements like black economic empowerment, affirmative action, competition law, labour regulations and a host of other conditions seem to assume that business is large and has extra hands to implement it all.
In my experience, more often than not people with fixed income think employers are rich and live the life. It makes it even harder for entrepreneurs who fail, as they are led to believe failure is unusual. Meanwhile, only about 12% of businesses survive longer than 10 years.
The best thing many entrepreneurs heard was when the president said we need business to perform.
Many an entrepreneur feels that someone is just starting to listen. I pray that much of the misplaced hate and false facts eases and our population starts to understand the risk-takers and the doers.
Mike Schüssler is chief economist at Economists.co.za