The practical aspect of meaningfully addressing the unemployment challenge was brought home to me forcefully in two recent interactions with small business owners. It is widely acknowledged that small businesses are the real engine to job creation in any economy, which made these incidents even more alarming.
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In the first, my IT service provider related to me that he had been offered the opportunity to scale up his primarily hardware based business dramatically by accepting an offer to manage an entire local network.
Opportunity vs risk
The contract would require him to provide a minimum of 12 onsite staff for 24 months. While I thought he would jump at the opportunity, his reluctance was based on a number of issues. Firstly, given that the contract was linked to state procurement, he was very concerned about security of timeous payment. Secondly, he would be appointing staff on a fixed 24 month contract, and even with the possibility of probationary clauses, the prospect of dealing with dismissals perturbed him.
My second interaction was with the owner of the hair salon I use. He was about to open another branch in the upmarket Zimbali precinct.
I was excited at this expansion, but was quite dismayed when he told me that he would not be employing a single new person, rather, was going to initially try and rotate his existing staff, given that the distance between the two outlets was minimal. In his case, he was less concerned about the profitability of the new outlet, but rather the administrative burden of having to hire and/or fire new staff.
There are a few lessons to be taken from these real-life situations:
• The powers that be need to really understand the impact of late payments on small business and their willingness to create new jobs
• How allowing more flexibility into labour laws will encourage new employment
• That even entrepreneurs who are considering expanding are avoiding or minimising taking on new staff
Improving the conditions for increased job creation requires some fundamental action by government in these critical areas.
After matriculating, Vijay Naidoo studied Economics in the UK. Upon his return, hejoined the family construction business as MD for 10 years.
He subsequently joined his sister in their furniture manufacturing business as director for quality assurance and operations. He was responsible for all quality aspects of their products, and led the project to the business achieving an ISO 9000 quality accreditation. As an export focused business, this was important for our international competitiveness.
Mr Naidoo has an abiding interest in quality management and productivity improvement, particularly in manufacturing.
More recently, he has focused a lot of his time on giving back to the community by way of mentorship of small businesses and sitting on the executive of the South Coast Chamber of Commerce. He also sits on the Board of the Ugu South Coast Development Agency.
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