“Businesses do not exist to create jobs. Jobs are merely a socially desirable byproduct of the search for profit. Similarly, as outlined above, the government’s primary role is not to create jobs, it is to ensure that the business environment is conducive to companies being able to compete and operate profitably and thereby generate employment (and tax revenues!)”.
Extracts from editorial opinion – What is expected of business? – today in Business Day.
“WHAT is it, exactly, that the government and its supporters want from business? Strong comment following President Jacob Zuma ’s state of the nation speech last week suggests that, somehow, business is not “coming to the party” and playing its part in the creation of jobs and thereby helping to solve S A ’s greatest problem — poverty”.
“The African National Congress (ANC) has always had misgivings about business even as it has tried to co-opt and join it, and, as it has loaded taxes and levies and favours and rules and allowed its senior officials to criticise and demonise business without any restraint, business has become a little wary of the ANC in return. So the two stare at each other from their trenches today. There is little mutual trust even though they share a common enemy in poverty”.
“But then Mr Zuma made an important concession to business last week that may have been missed in the general dreariness of his address. Speaking of the need to create jobs and the target of 5-million new jobs in 10 years the ANC has set itself, he said: ‘While looking to the private sector in particular to help us create most of the jobs, government will certainly play its part’.”
“It is always good to be reminded that the only unborrowed money the government has with which to relieve poverty or build infrastructure comes from the taxes that companies pay (personal income tax is a minor contributor to the total) and that taxes can be retrieved only from companies that make profits. In S A , about 20 mainly private-sector companies form the backbone of the entire economy and the tax pot from which the state feeds”.
“The ANC often gives the impression of having given up on the private sector, either because it does not believe capitalists will ever see the world through its eyes, or because it is convinced the New Growth Path’s goals can be achieved through the developmental state assuming the business function”.
“But the trouble with the ANC’s approach to economic development, including the New Growth Path as it currently stands, is that it expects the private sector to buy into a model that is in many areas fundamentally anti-business”.
“Sooner or later it is going to dawn on the 40% of adult South Africans who cannot find work that their interests coincide with those of the private sector, and that the unholy alliance of left- wing ideology and patronage that is currently driving ANC policy is no friend of theirs”.
“We hope business is ready to try to grab the ball Mr Zuma has dropped ever so gently into its court. It can still reasonably expect him to say more about what he needs in the coming days. And then, surely, a vital next step is a real summit between government and business to thrash out mutually supportive positions and to map out a way ahead”.
This letter by Robin Bosomworth (A glimmer of hope)in response to the above editorial appeared in Business Day today
“I refer to your appeal to business (What is expected of business, February 15). I doubt that President Jacob Zuma will touch many hearts or convince many businessmen until there are signs of recognition of the mainly disastrous (left-wing) policies adopted over the past 15 years.
One need only look at the deindustrialisation taking place — in clothing, textiles, steel, manufacturing, agriculture, construction — and the overall loss of competitiveness leading to huge unemployment and an over- reliance on a narrow mining industry propped up by high world prices. And the never-ending pile of largely negative legislation stacked up ahead.
The reasons are to be found in the more than 1000 pieces of “world class” legislation forced through without much consideration about the effect. Add the effect of labour, competition, black economic empowerment, mining, equity, environmental issues, laws, etc, and you find declining competitiveness and loss of jobs. And it will get worse.
Add to this the sheer effect of government incompetence and the cost of its services and the power of the labour unions.
It is strong industries and big business and the many small businesses they spawn that create jobs. The government and most commentators really have no idea where to begin — industry knows the reasons but who is listening? Look at how Iscor created tens of thousands of jobs and billions in exports until it was sold. Or the politics and incompetence at Eskom.
One could go on ad infinitum — but the fact remains that there is no confidence in the current government and they are unlikely to change. As much as they are frustrated by their own incompetence, business is helpless and disillusioned. The system is regulated and distorted to the point where it no longer works. Unemployment, poverty and inequality are the direct outcomes. Can everyone see that?
Central to the problem is the issue of political power and ideology. How do you change that? I wish I knew. Maybe it is within the culture or psyche of Africa as distinct from the East. Or a colonial inherita nce, or in the origins of the African National Congress? Or a bit of all of those?
I believe business has done as much as can be expected to hold everything together and there is no shortage of goodwill. More than words are required from President Zuma — it requires a recognition that what the government is doing is not working, and radical reassessment and reshuffling of the pieces. This will not happen.
That is why Business Day is so important in terms of the debate. And your guiding role in the matter. It provides a glimmer of hope.
Robin Bosomworth”