The release of the latest unemployment statistics provoked the usual barrage of commentary and nave-gazing from all and sundry.
Cosatu weighed in with the comment that the government needed to urgently address the crisis to avoid a total meltdown in the country.
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The reality is that only sustained economic growth will provoke meaningful growth in employment in the country. No amount of tinkering and talking or tantrums by unions is going to convince companies to employ more people.
Signs
Unfortunately, the signs are not looking good for any rapid upturn in our growth trajectory. As the government battles to balance the imperatives of radical economic transformation with stimulating growth, many commentators are saying that the two are mutually exclusive – more frankly that there is a case to be made for suspending the economic transformation agenda and diverting more resources to placing the economy on a growth path.
The argument continues that in an environment of strong economic growth, the country will be better placed accelerate transformation.
Transformation
The push for economic transformation is underpinned by a raft of punitive legislation, which is currently a major disincentive to business. As a recent contributor to the Business Live website writes ‘the government is telling business who to buy from, who to sell to, who to employ, who must manage and who must own…..and you wonder why we are showing very little investment and zero growth’.
With growth forecast at a dismal 0,6 percent for this year, urgent measures are needed to arrest our slide.
The old saw that the global recession is one of the major contributors to our dismal growth statistics must also be firmly rejected. Apart from the fact that many of our African neighbours have achieved sustained economic growth over the last 6-8 years, T.J Strydom, writing in the Business Times last week, points out how several European countries like Poland, Turkey and Ireland grew their economies to leapfrog ours over the past few years.
The key factors in their success have been, amongst others:
Policy certainty and continuity – even when administrations changed (Poland)
Focus on key sectors to drive growth (Israel – high technology manufacturing)
Niche high value tourism (Turkey)
Improved ease of doing business (all)
Inward foreign investment like the recent purchase of Pioneer Foods by PepsiCo, while reflecting a glimmer of increased confidence, will not make a difference to our growth prospects, and could even exacerbate unemployment numbers as the new owners right-size the new acquisition to align with their business model.
As economist Mike Schussler commented on the acquisition, ‘ it is a hopeful sign….but I’d like to see someone starting something from the ground up that employs people and builds factories’.
After matriculating, Vijay Naidoo studied Economics in the UK. Upon his return, he joined 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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