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SA needs new thinking to ignite economy

         Date: 2012-05-28

           Tag: ignite economy, SA thinking ignite economy

Summary: Two stories made headlines last week that underline the starkly different directions the main stakeholders of the SA economy are pulling. It also suggests a new mindset if our economic woes are to …

 Two stories made headlines last week that underline the starkly different directions the main stakeholders of the SA economy are pulling.  It also suggests a new mindset if our economic woes are to be resolved.

The first story was the demand by municipal workers unions of an annual wage increase of 13%, (which has been lowered from the initial demand of 15%). 

The second is the findings of the 2012 Manufacturing Survey that fingers bureaucratic inefficiency, financial mismanagement and adverse procurement practices at SA’s municipalities as major impediments to small business sustainability and therefore job creation.

Apart from the obvious irony, the stories epitomize how different the thinking in the country is.  It highlights the different perspectives of government, labour and the private sector towards efficiency and the rewarding of productivity.

South Africa’s most significant problem is unemployment and although it is on the top of virtually every priority lists, wage demands such as the current one for municipal workers does not seems to echo this in the practice.

I am not against remuneration adjustment north of the inflation rate, but then it must reward efficiency and productivity.

Currently, there is virtually no correlation between wage demands and productivity and in many cases it is not even on the negotiation agenda.

The result is that any CPI plus wage increase decreases productivity even more. It also reduces South Africa’s ability to compete with international competitors. This in turn, results in job losses.


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