The weak rand isn’t a negative for all people
ALTHOUGH the bad news of a collapsing rand affects everyone, there might be hope for those involved in small manufacturing plants.
The higher cost of foreign currency leads to all sorts of ills, such as food increases and fuel increases. Borrowing has also become more expensive.
However, I had interesting discussions with clients who are in the Cape manufacturing industry. Of the seven companies I spoke to, six reported bigger and more varied orders.
The cost of imported goods does increase the price but the cost of importing finished products is becoming prohibitive. All six of those who reported greater orders had contacted me because they wanted to start re-employing individuals who had been retrenched over the past six months.
When a retrenchment programme takes place, the employer invariably guarantees re-employment to those who were retrenched, should the positions become viable within a certain period. We contacted those who had been retrenched and many were pleased to report back for duty.
When importing from abroad there are many handicaps, among them time constraints and the weakened rand that has pushed up prices.
When importing from jurisdictions such as the Far East, the import companies are forced to order in bulk. They are hamstrung, trying to vary the order to cater for various colours, sizes and shapes. Local manufacturers have become a lot more nimble and are able to deliver quicker, cheaper and in accordance with the requirements.
Unfortunately, our government is not doing much to encourage the manufacturing sector. Manufacturers are desperately waiting for a change of government, to one that will understand business.
For the manufacturing sector to be quickly responsive to orders, it should be able to engage staff for short periods and do away with many of the constraints in the Basic Conditions of Employment Act. For instance, if an order specifies delivery within 48 hours, then it would be incumbent upon the manufacturer to engage staff for a short period of employment. Our law frowns upon this.
When speaking to labour lawyers and consultants in other jurisdictions, they said they had structured quasi-type employment contracts that considered the requirements of various orders. Employers in forward-thinking jurisdictions that have governments that understand business are able to engage staff quickly for short bursts, with no liability thereafter.
The government and the Department of Employment and Labour need to reassure the business community that they can tackle employment swiftly and terminate with no liability. South African business is finding it easier to outsource work to those who don't adhere to our labour legislation.
Despite the weak rand, many businesses are saying that it is easier for goods to be manufactured elsewhere. We are a wealthy country that has raw materials and the scope to train young people. We must take the opportunity of a weak rand by turning it into a positive. We need to employ as many young people as possible. This will be done only if the employers know that the employment can be terminated as easily as they can engage people.
The horror of having to tackle claims of unfair dismissal sometimes makes an exercise worthless. We need to reassure the business community that the laws will adapt to changing business circumstances.
In this way, we can start encouraging small businesses to pick up the economy by reinvesting in themselves.