It’s a lack of growth that’s our prob­lem

Sunday Times - - Business Opinion - Andile Khu­malo Khu­malo is an en­tre­pre­neur and char­tered ac­coun­tant

Last week, the govern­ment, civil so­ci­ety, labour and busi­ness sat for two days in Joburg try­ing to find ways to save and cre­ate jobs in a coun­try marred by slow eco­nomic growth and the high­est inequal­ity known to man.

My read­ing of the frame­work agree­ment en­tered into by the “so­cial part­ners” af­ter­wards leads me to be­lieve that parts of the sum­mit were tan­ta­mount to “do­ing the gar­den while the kitchen is on fire”. Nowhere in the en­tire agree­ment is there any ac­knowl­edge­ment that the sin­gle most im­por­tant de­liv­er­able to curb the un­em­ploy­ment chal­lenge is eco­nomic growth.

“Since 2014, eco­nomic growth in SA has slowed down and be­come more volatile. At the same time, we have not qual­i­ta­tively re­duced the job­less­ness and inequal­ity that emerged be­fore democ­racy. These twin bur­dens are the main block­age to sus­tained eco­nomic progress.”

This pre­am­ble is the only per­spec­tive of­fered by the sum­mit on the im­por­tance of eco­nomic growth. Clearly, we have be­come ex­perts at stat­ing the prob­lem, even re­peat­ing it a few times over, in the hope that the so­lu­tion will some­how find us.

We know that eco­nomic growth is the prob­lem. We know that, when cou­pled with a high rate of inequal­ity, es­pe­cially man­i­fested on racial lines, stag­nant growth is the ac­tive in­gre­di­ent in an ex­plo­sive so­cioe­co­nomic cock­tail.

The jobs sum­mit frame­work goes into a lot of de­tail on var­i­ous ini­tia­tives, which on their own are good at ad­dress­ing sec­toral chal­lenges. The agree­ment touches on ev­ery key sec­tor of the econ­omy, from agri­cul­ture to man­u­fac­tur­ing, min­ing, au­to­mo­tive and in­fra­struc­ture. That is OK, but we are miss­ing a key in­gre­di­ent: strat­egy.

I am yet to un­der­stand what our strat­egy is to achieve eco­nomic growth as a coun­try.

And no, the Na­tional De­vel­op­ment Plan (NDP) is not a strat­egy. It is an ex­cel­lent anal­y­sis of our chal­lenges and op­por­tu­ni­ties, and tells us what tar­gets we need to hit in or­der to have the SA we want. It doesn’t tell us how we will ac­tu­ally hit these tar­gets and, per­haps more im­por­tant, what do we do when things don’t go ac­cord­ing to plan.

In any case, a strat­egy needs tweak­ing when the con­trol en­vi­ron­ment changes. For in­stance, when the NDP was crafted, no­body could’ve fore­told a world dom­i­nated by a self­ish “me first” na­tion­al­ist ide­ol­ogy, as cham­pi­oned by US Pres­i­dent Don­ald Trump.

In­stead of try­ing to co-or­di­nate a laun­dry list of var­i­ous ini­tia­tives aimed at curb­ing un­em­ploy­ment, per­haps the jobs sum­mit should’ve taken the time to have a strate­gic con­ver­sa­tion about what we need to start do­ing, and stop do­ing, to stim­u­late the busi­ness con­fi­dence that would sup­port eco­nomic growth.

The govern­ment needs to stop in­tro­duc­ing un­cer­tainty at pol­icy level. Things must be clear and con­sis­tent. What in­vestors per­ceive as bad pol­icy is of­ten not about the pol­icy choice it­self be­ing an­ti­in­vest­ment, but that the poli­cies are dif­fi­cult to un­der­stand and pre­dict well enough to fac­tor into an in­vest­ment case.

Thanks to the likes of Stein­hoff, KPMG and the state cap­ture rev­e­la­tions, SA Inc is not shin­ing with glory nowa­days. Busi­ness needs to work on its trust deficit with so­ci­ety and the world at large.

As for labour, it is high time there was due con­sid­er­a­tion of labourlaw re­lax­ation for SMMEs. There are a num­ber of labour reg­u­la­tions that, though crafted with the best in­ten­tions, sim­ply make it too dif­fi­cult for small busi­nesses to em­ploy peo­ple when they need to. The law is writ­ten on the as­sump­tion that ev­ery em­ployer is a big com­pany that is able to ful­fil all the re­quire­ments de­manded by our leg­is­la­tion. In truth, most em­ploy­ers in an econ­omy like ours should be small busi­nesses. It fol­lows that leg­is­la­tion must make it eas­ier — not more dif­fi­cult — for such busi­nesses to em­ploy peo­ple.

How­ever, when all is said and done, a strat­egy that ig­nores the dig­i­tal age we live in is not worth the pa­per it is writ­ten on — es­pe­cially if that strat­egy is seek­ing to make more peo­ple more em­ploy­able.

It is com­mon cause that tech­no­log­i­cal in­no­va­tion and com­put­ing power will con­tinue to oblit­er­ate un­skilled labour. Yet the “Ed­u­ca­tion and Skills In­ter­ven­tion” sec­tion of the frame­work agree­ment makes no ref­er­ence to the ur­gency of in­creas­ing dig­i­tal skills to en­sure our labour force is em­ploy­able in the decades to fol­low.

So was the jobs sum­mit just an­other talk shop? Well, the govern­ment com­mit­ted to no fur­ther re­trench­ments, and the pri­vate sec­tor said it would do its best to fol­low suit. That’s a start, I guess.

But as they say in busi­ness, “you can­not shrink your­self to growth”. No amount of try­ing to save cur­rent jobs is go­ing to help cre­ate new ones. There is no way to do this, other than grow­ing the econ­omy and find­ing ways to re­main com­pet­i­tive.

Leg­is­la­tion must make it eas­ier — not more dif­fi­cult — for SMMEs to em­ploy peo­ple

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