Redefine chairman has ideas on why business should create jobs, and how
Veteran property investor and Redefine chairman Marc Wainer used last week’s Reit (real estate investment trust) conference to urge business, especially white companies, to come up with a plan to dent SA’s mammoth unemployment. Business Day asked him what he had in mind.
The country has lots of holes, and the two most pressing ones are unemployment and education. Just over 6-million people are unemployed; on an extended basis, over 9-million. Those are the people supposed to be driving our economy. If they’re unemployed, a) the economy’s going to tank and b) we’re sitting on a potential revolution. We’re not going to take unemployment from 27% to zero ... but business needs to do something and if we don’t — this is my point — sooner or later government is going to impose something on us.
I suggested that business get together and say: we’re going to employ another 5%. If everybody did it, it would be a level playing field. Ultimately, our shareholders are going to get a slightly lower distribution but everybody’s rating would be the same. Say every Reit decided to issue 1% of their capital as shares into a fund? We’re probably a R600bn industry, so that would be R6bn of shares in a fund earning 7%, ie R450m a year, to train people in various businesses. Anything from catering to printing — anything that we use. Every company could say, “we’re going to give a percentage of our business to this new company” or you take some of that R450m and buy businesses and you give guys a small printing business: 10 or 12 people are employed and they become owners. Almost like a co-op. Business in 1994 dodged a bullet and we truly have paid lip service — and I include Redefine as well because we’re governed by what our opposition does, to some extent.
There are plenty of arguments against what you’re proposing — that it’s the state’s role, you can’t just give someone a business, etc
Well some of them will fail and some will succeed, but we can’t sit here. We have 1.3-million kids enrolling in grade 1 every year and maybe 100,000 get to varsity. Somebody with a university degree has got a 75% chance of getting employed fairly quickly. With a matric it’s 50%, without matric it’s virtually nothing and we’re losing 700,000 to 800,000 kids a year to join the unemployable.
What’s the response been?
Business has short memories. In the 1960s, when I first got into property, we had a thing called rent control for residential property — and nobody built residential properties to rent. So the minister of community development stood up in Parliament one day and said: “Okay, you guys don’t want to build residential properties, from now on, for every 100m² of commercial property you want to develop you have to build Xm² of residential for rent.” End of story. So what happened? Berea, Hillbrow, Joubert Park: most of those buildings that came up in the 1960s were built as cheaply as possible in order to comply so guys could build their shopping centres. (In) the 1980s when people started to migrate from Joburg’s CBD, the late Gerald Leissner tried to go to all the Old Mutuals and Sanlams saying: “We need to put more security guards on the streets, more cleaners, we need to make sure our tenants stay.” And the answer was: “It’s not our job, we pay our rates.” There was no effort. So business has got this attitude — our focus is always on the bottom line. You want to increase income and minimise the overhead. That’s the simple motto and that’s fine in a normal society but we’re not in a normal society. It’s something we need to do voluntarily because it’s an investment in our future.
On a scale of 1 to 10 how positive are you?
I’m probably a 7 at the moment, medium term, and I’m probably at 3 or 4 long term if we don’t address this problem. And one of the big issues is also our labour policy. If you take the steel industry: you have collective bargaining between the federation and the union and then that is imposed on the SMEs. Those SMEs can’t compete. So what happens? They don’t grow or they close down.
What do you think SA’s investment case is? Do we have one?
Every other company is looking to invest offshore. What is that saying? That we don’t see an investment case in SA? But we need an investment case, we need people to be employed, but we have to start ourselves.
Are you worried about the call for land expropriation without compensation?
I’m not. It’s something they need to do but the question is: what are they going to do? If you asked whether black people wanted land in the rural areas to farm or a 500m² piece of land somewhere in Gauteng, I promise you the answer’s the latter.
How important is title to you?
It should be sacrosanct. But that’s a normal society. I’m much more about building houses because (that’s) wealth creation. Get people to own homes. You’ve got all this land owned by government lying there and doing nothing. Do something with that for a start.