With South Africa in its fifth week of lockdown, with estimates of over one million job losses this year and the closure of thousands of businesses as a result of the economic shutdown, Productivity SA, the entity tasked with promoting employment growth in South Africa, has prepared a document detailing a way forward for South Africa ‘s economic growth beyond the Covid-19 pandemic.
In this document, Productivity proposes some recommendations to what it believes must be at the heart of our economic response to the South African economic challenges that have pre-existed the Covid-19 and have now been exacerbated by the crisis.
The document is being submitted to the Department of Employment and Labour so it can use it in NEDLAC deliberations, leading to urgent interventions, coordinated by the Department of Labour and Productivity SA.
The Chairman of Productivity SA Board, Prof Mthunzi Mdwaba says: “The Covid 19 crisis when compared to the Global Financial Crisis of 2008/9, referred to as a “car crash” is now being referred to as a “train wreck”.
It will have absolutely devastating consequences for the world, and South Africa specifically, while it also provides us with an opportunity to re-calibrate the world, go back to the basics and have re-adjusted structural systems that serve our people”.
Therefore, a productivity-driven economic growth approach provides massive potential for improved competitiveness and sustainable economic growth for South Africa and also commended measures put in place put in by the South African government.
In the document, Productivity SA has called for South African policy to be guided by a structured and concerted effort to place productivity growth at the pinnacle of key economic growth policies.
The duality nature and structure of the South African economy requires urgent restructuring and reform, which must be built on policy coherence and policy certainty across government, a close collaborative effort between government, business and labour; a commitment to ensure that the linkages between the primary and secondary productive sectors of the economy are maximised; as well as a combined and constructive drive to overcome the key constraints to manufacturing-led, value-adding growth, with special emphasis on labour-intensive sectors as advanced in the Sector Master Plans, such as agro-processing and clothing and textiles.
Through this document, Productivity SA proposes an approach which focuses on four pillars, namely, an Integrated Training and Skills Development Ecosystem, Strategy and Programmes to encourage life-long learning, which calls for strengthening of South Africa’s human capital, which can help guide both public-sector and private sector organisations to create ‘retraining engines’ to enable lifelong learning.
The second pillar is an Integrated Enterprise Development Ecosystem to improve the competitiveness and sustainability of enterprises, with a focus on SMMEs; a policy decision that financial support by DFAs (SEFA, IDC, NEF, etc.) to SMMEs should be linked to productivity outcomes, and that non-financial (Enterprise Development Programmes) support should be coordinated.
The third pillar is an Integrated Research and Innovation Ecosystem to ensure the provision of productivity and competitiveness related value-added information and statistics to inform evidence-based planning as well as monitoring and evaluating the impact of our interventions. In this regard, Productivity SA is currently forging relations with Institutions of Higher Learning such as University of the Western Cape (UWC) and University of Pretoria as well as international organisations such as the International Labour Organisation (ILO) seeks to drive the productivity movement.
The fourth pillar is the development of a national Productivity Movement to promote a stronger culture of productivity at all levels and build awareness of the importance of and new mind-set about productivity in South Africa, which could pave the way for many more ‒ and more highly paid ‒ jobs and ultimately a more inclusive society.
“We are encouraged by the work done by the Unemployment Insurance Fund (UIF) through the special Covid-19 benefit which has paid out over R1.6-billion, assisting over 37,000 companies and 600,00 workers. R40 billion has been set aside for income support payments for workers whose employers are not able to pay their wages.
An additional amount of R2 billion will be made available to assist SMEs and other small businesses says Prof Mdwaba.
Whilst welcoming the measure of R500 billion plan that has been announced by President Cyril Ramaphosa, as much-needed relief to poor households and those who have lost their jobs, as well as businesses in danger of closing its doors, Prof Mdwaba says there is a general lack of appreciation of the role of productivity in the country.
The chairman says at the heart of South Africa’s economic problems is the fact that it has very low levels of productivity growth and sustained competitiveness.
The lack of productivity culture and accountability thereof, as well as policy framework and failure to deploy resources to promote productivity, is impacting negatively on the competitiveness and economic growth of the country.
This was also echoed by Chief Executive Officer (CEO) of Productivity SA, Mr Mothunye Mothiba, who says “ the lack of a productivity culture as well as accountability to unlock the productivity potential of the country at national, sector and at enterprise level results in the exclusion of the majority of South Africans from the mainstream economy of the country and unfortunately the low economic growth due to factors brought about by the Covid-19 pandemic is going to worsen the country ‘s socio-economic situation”.”
It is crucial for South Africa to emulate the Productivity Policies and Frameworks adopted by the countries with a Competitiveness Score / Index Value of over 70 to unlock the potential of productivity to improve competitiveness and sustain economic growth” concludes Mothiba.