Instead of futile, theoretical and impractical plans, surely the government should be seeking a practical compact with the small businesses that are able to assist in alleviating the unemployment and skills crisis? The only requirement is that it listen to the people who can make a difference, as opposed to academics, trade unionists and questionable “experts” who have never created employment, let alone preserved it.
This is the opinion of Simon Mantell, who makes biscuits in a factory in Cape Town, and his article Youth wage incentive will be another waste of money was first published in Business Day today.
Random extracts from an extremely important article
Unemployment in South Africa warrants the declaration of a state of emergency as opposed to a mention in the state of the nation address.
The youth wage incentive represents the latest in a raft of plans that is being trumpeted as the panacea for high youth unemployment. If the government Jobs Fund has spent R3bn creating 750 jobs at a cost of R4m a job, then one has to wonder how much taxpayers’ money will be wasted on this new initiative whose only guarantee will be failure.
The solution to employing the masses of presently “unemployable” young South Africans does not lie in jumping from one impractical but politically expedient idea to another. Rather, it involves facing the realities, accepting them and implementing practical solutions.
It matters little whether the proposed solution for the unemployed youth is a youth subsidy, as originally envisaged, or a youth incentive, which appears to be the route agreed to in the National Economic Development and Labour Council (Nedlac). Anyone who has had the misfortune of attending a Nedlac conference can only wonder in amazement at the backslapping, expulsion of hot air and meaningless statements. The youth incentive will result in billions of rand being wasted, with the collateral damage being that the politicians’ empty promises will create false hope, further damaging the morale of school-leavers.
It would appear that, once again, the government and its partners are looking to big business for solutions. Big business is downsizing and automating wherever possible and its claims of empowering previously disadvantaged South Africans by outsourcing some functions to them is hollow. Outsourcing is the best method to reduce employee numbers and the concomitant risk associated with such employees — whether such risk is industrial action or the day-to-day management of these employees.
The proposed youth incentive scheme will fail because:
• Profitable businesses don’t employ people because of incentives — they employ productive people to produce goods or services on which they can make a return;
• The government and its alliance partners have created unreasonable expectations in the minds of the unemployed about what their real worth is;
• Irrespective of the incentives, no well-managed business will actively seek out potential employees who are unskilled, who have unreasonably high expectations of their worth, and who have no comprehension of reliable attendance and time-keeping;
• The scheme will no doubt be complex — a whole new verification industry will be spawned with more money spent on verification than anything else;
• The complexity of what is proposed will lead to huge fraud and corruption;
• Most businesses are so busy focusing on what they manufacture or supply that they will have neither the time nor the inclination to manage this process;
• Most new jobs are being created by small businesses, which are labour-hungry due to limited access to automation; and
• Irrespective of the incentives, these small businesses will not employ additional and unnecessary staff because of the administrative hurdles in applying for incentives and because of the labour law, which makes it difficult and to fire errant employees;
What are the realities and practical solutions the government and its partners need to accept?
• That most job creation will come from the small-business sector;
• That there is a tremendous transfer of skills in small businesses where the owners and managers work shoulder to shoulder with employees;
• That a lack of automation in small businesses means reliable employees are their core assets — it is counterproductive to take unfair advantage of employees;
• That a new labour law needs to be introduced that simplifies the process for companies employing fewer than 200 employees to hire and fire staff;
• That businesses are incentivised solely through the South African Revenue Service (SARS) — an incentive scheme could easily and cheaply be implemented based on the growth of monthly remittances from small businesses. Any fraudulent behaviour by businesses could be punished through the existing SARS penalty regime;
• That the youth need to be made aware that a lack of skills and training means they have little or no value to potential employers. However, if they do the hard yards, then the rewards will come; and
• That opportunity for success exists for school-leavers who are prepared to roll up their sleeves.