Towards an equitable balance between economic growth and job creation

It appears that although the economy might show marked signs of improvement, employment figures have remained virtually unchanged, while capitalisation has advanced more steadily.

In fact, to become more competitive globally, the manufacturing sector has invested more in larger plants and modern technology, with minimal job-creating potential. One reason for this is to be found in the present government’s labour policies.

Furthermore, the present inflexible labour policies are a definite disincentive to foreign investment.


Job creation

We believe that a job creation strategy does not necessarily have to be a highly technical and complicated issue. It should remain within the simple economic framework of basic supply and demand.

Furthermore, In addition, the aspects of wage negotiation and bargaining policies refer to those who already fall within the ambit of employment and access.

These debates on economic disputes centre on the problems of those who are already employed, but they

do not help with the unemployed. This does not mean that we should discard the wage and bargaining processes as we believe that those who have jobs must be protected, and those who offer employment should be able to generate greater production and profit margins as well as to generate more jobs.

Suggestions toward the debate on job creation

Programmes to assist in job creation

Tax incentives for skills, education and support for small business will be one policy standard.

Create an employment development and skills finance institution

In most instances the commercial banks contribute to the discouragement of employment opportunities because of their stringent requirements.

The informal sector and smaller business operation  should use this avenue as a savings and loans facility, instead of using the bigger banks for such transactions. Regulations will of course have to be drawn up with regard to qualifications and conditions, but access to such an institution should be created to encourage development and employment strategies. In fact, limited or non-taxation principles can be applied to such groups, depending on their levels of growth and expansion.

Government can filter funds into this finance institution that would ordinarily have been used by various ministers creating their own employment initiatives.

Other institutions may wish to help fund this institution, if government provides tax incentives for such investment practices.

Improvement of the education sector is needed so that there is compatibility with labour demand and supply.

With respect to education, South Arica often comes last in a range of international tests relating to maths and science.  The business community knows which skills it needs and what it takes to make someone employable. 

The ACDP will work with business to adapt the school curriculum, (and) in particular, the curriculum for further education and training (FET) courses, so that young people leave school ready for work. Training programmes will be tailored to meet demand. If this does not happen, money and time spent on training will be wasted. In South Africa, we have already seen the success of one such effort, in which the five biggest construction companies helped rewrite the syllabuses of Technical and Vocational Education and Training colleges (TVET) to meet their industry’s needs. The result was an increase in the percentage of graduates who found jobs.

Small Medium and Micro Enterprises (SMMEs)

We believe that small business enterprises should be the cornerstone of the job creation market. These are fledging economic giants, and as such their vibrancy and creativity pushes them towards expanding their markets. Big businesses have already achieved saturation point and are therefore more liable to reduce staff. Small businesses, however, operate according to the opposite dynamic: in order to expand, they need to enter more markets, thus ensuring a push in their production levels which results in increased labour. The small business sector should benefit overall from a low taxation policy.

Big business and labour

Both labour and big business must ensure that production levels as well as wage and employment levels remain competitive.

However, the cost of labour in particular has resulted in South African businesses not being globally competitive. The issue of the present inflexible labour legislation needs to be revisited, in order to obtain a balance between the interests of business and labour in South Africa.

We need to find ways to equitably balance the scales of employment, production and growth.

Government’s role

The government has a role to play to ensure that the delivery of social services and the economic growth environment is conducive to sustainable development.

It should also provide projects with labour-intensive programmes. These initiatives can be conducted within rural areas, or developed on the peripheries of urban areas.  Because the influx to urban areas increases the rate of unemployed persons, we need to reduce urban economic stress.

Labour policy objectives

We must strive for a labour policy that contributes to job creation, full employment and economic growth.

The global economy is undergoing sweeping changes as more emphasis is being placed on adopting new production methods which will minimise the effects of labour unions and worker privileges.

We will have to ensure that the rights of our workers are protected despite this globalisation trend. In fact, more should be done to boost job creation through a controlled decent living wage and distribution of jobs to more workers.

We need to concentrate on how to divert certain jobs into more profitable labour-intensive programmes, thus avoiding retrenchments.

Employment conditions must not be regulated by strict rules in the work place, but by strict ethical codes to determine what is reasonable and equitable to everyone for an acceptable standard of employment.