Speech by the Chairman of Productivity SA, Prof Mthunzi Mdwaba

Fellow South Africans, Global partners, Ladies and Gentlemen, good morning,

Let me take this opportunity to thank the Honourable Deputy Minister for her always making time for us and also release her to attend to her duties and to welcome everyone remotely and virtually from the ILO in Geneva where I am attending GB meetings. I have noted that our symposium has a wide diversity of our partners and friends participating, from academic institutions, organised business, trade unions, the ILO, our Swiss colleagues, government departments, colleagues from within Productivity SA, the media, our board members. I take this opportunity to thank you all in advance for gracing our occasion.

How the world has changed!

Just over a year ago as we were all pulling up our sleeves and gearing towards getting into the trenches and tackling the sluggish economic growth that has beset South Africa, normalcy as we know it was brought to a screeching halt. It was on the 23rd March 2020 that the South African President, His Excellency, Mr Cyril Matamela Ramaphosa, announced a Lockdown in the country to curb the spread of COVID-19. At the time, focus was solely on curbing the spread of COVID-19. It was to ensure that all citizens stayed at home to avoid contracting or spreading COVID-19. At the time, virtually all industrial activity came to a standstill while most shops, schools, gyms and of course bars were closed. At the core of the lockdown was a need to encourage social distancing as the only intervention available to halt the chain of transmission – giving us all a chance to fight the pandemic.

That the lockdown and the various levels of subsequent lockdowns helped curb the spread COVID-19 is irrefutable and it would seem insensitive to suggest that currently at Level 1 and with 1 538 451 confirmed cases, 1 463 953 recoveries, 52 196 deaths and 182 983 vaccines administered in South Africa, the country has fared fairly well. However, the reality is that under the current global circumstances, South Africa has not done badly from a health perspective. One death is one death too many, but in the grand scheme of things many more lives have been saved and the battle to save more lives continues and it is for this reason that we meet virtually for this important session.

Whilst at inception, the fight against COVID-19 focused on curbing the spread of the virus, it is common cause how much devastation it has caused globally and economies have been ravaged. It is trite that economic growth is at the core of livelihoods and poverty eradication. The onset of the pandemic and consequent lockdowns saw industries come to a halt and over a million jobs lost in South Africa.

As matters stood, prior to COVID-19, South Africa was beset with an economy that for over ten years could not exceed 2% growth or create enough jobs. Due to the pandemic the situation has simply deteriorated and for the first time the country has breached the 30% unemployment mark and sits with an official unemployment rate of 32.5%. Simply translated, one out of three jobseekers is unemployed.

As the Honourable Deputy Minister of Employment and Labour, Ms. Boitumelo Moloi has already attested, this has simply made the job of the department and Productivity SA even more urgent. Basically, Productivity SA has a duty to unlock South Africa’s productivity growth and potential for sustained competitiveness and economic growth post COVID-19 and to give effect to the Economic Reconstruction and Recovery Plan.

The Honourable Deputy Minister who abundantly shares the vision of Productivity SA has pledged her support unequivocally. However, it is your presence as experts and key role players in business, labour and government that will see efforts to increase economic growth come to fruition, and I would like to officially thank you for joining us today and making time to be part of this bold and noble cause. Productivity SA and productivity generally has completely been ignored in this country and it is only recently that it is been discussed and considered in earnest. Consequently, we have slid 10 positions on the Global Competitiveness Index, standing at number 44 just over 10 year ago, to a miserable 59 out of 63 measured countries last year. Most South Africans had not even heard of Productivity SA till recently because it was kept marginalised on the side, without any support from its own parents that gave it birth, with no requisite funding, that in some instances for one of our programmes took us over 18-24 months to have unlocked. Today though is not for lamentation, it is for making a clarion call on all of South Africa to get the shoulder behind the wheel and make a collective effort to assist us make waves, effect change, so we can all collectively be catalysts of change and impact our people.

The aim of this virtual symposium is to be truthful about our challenges without holding back and more importantly to suggest solutions, be solution oriented and devise pragmatic plans for implementation. To achieve this, we have invited Productivity SA ‘s partners from business, labour, civil society and government to engage in robust debate on productivity-driven interventions aimed at resuscitating South Africa’s economy as a way of facilitating the suggested solutions and placing us at the centre of the implementation where possible given that we have our own resource challenges. The virtual symposium will focus on three pillars of:

• An Integrated Training & Skills Development Ecosystem that also encourages life-long learning.
• An Integrated Enterprise Development Ecosystem to improve the competitiveness and sustainability of enterprises, with a focus on SMMEs.
• An Integrated Research and Innovation Eco-system to ensure the provision of productivity and competitiveness related value-added information.

The symposium comes against the backdrop of the adoption of the Economic Reconstruction and Recovery Plan launched by government in October 2020 as well as the SONA 2021. The symposium will focus on Productivity SA’s contribution to two priorities which are specific to its mandate of promoting employment growth and productivity. Productivity SA ‘s two priorities are namely:

1. Industrialisation of the economy and a massive increase in local production, which include:

• Improving the efficiencies of local producers
• Supporting local manufacturing as well as firms and households in distress
• An employment stimulus to create jobs and support livelihoods

2. Macro-economic interventions and enablers for economic growth, which include:

• End wastage including enhanced productivity
• Review and integrate government support for formal and informal SMMEs, start-ups and cooperatives.

In our Strategic Plan and Annual Performance Plan (APP) Productivity SA has set Productivity SA’s key focus areas over the Medium-Term Strategic Framework (MTSF) 2019-2024 and towards 2030, as well as our strategic and operational interventions to contribute to the country’s Economic Reconstruction and Recovery Plan during and post the COVID-19 pandemic. We invite you to get a copy of our Annual Report from our website – www.productivitysa.co.za

In adopting these plans, we considered South Africa’s low productivity growth, which is a key driver of long-term competitiveness and economic performance (two measures that are very low by world standards and require urgent attention). We also recognise the decline in economic activity since the 2008 financial crisis, which reached unacceptably high levels in 2020 and, worsened South Africa’s persistently high joblessness and inequality (including of opportunity, wealth, income, and social well-being).

The outbreak of COVID-19 resulted in distressed companies/firms, mostly SMMEs shutting down, others filing for liquidation and/or retrenching workers. Some enterprises are scaling down their operations to stay afloat and are consequently unable to pay full salaries and paying workers the bare minimum in line with the UIF Act threshold or the National Minimum Wage. Let us not fool ourselves though into blaming all our challenges on the Covid as the flaws we have were always there, pre-existed the Covid and we were always facing the same problems and the catastrophic levels we have reached would have happened eventually – it was never a matter of IF but WHEN…all the Covid has done is expose all the flaws, our shortcomings, our collective failure to attend to the challenges. We are just naked now with nowhere to hide. We are not alone in this as the entire global village has these ills, in varying degrees, but we are amongst the worst cases in urgent need of interventions.

Over the next ten (10) years (2021 and 2030), our strategic objectives and plans will be focused on vigorously unlocking South Africa’s productivity and potential for sustained competitiveness and economic growth as part of our interventions to implement the Economic Reconstruction and Recovery Plan, particularly priority areas 2: Industrialisation and Growing the productive economy; and priority area 5: Macro-economic interventions and enablers for economic growth.

During this period, our Enterprise Development and Support Programmes will be focused on supporting an Integrated Enterprise Development and Support Ecosystem (government-wide programme in collaboration and partnership with social partners) to create a coherent platform to enhance access and coordination of SMME support to create productive and decent employment. These plans will enable us to take our rightful place in the economy and the labour market to promote employment growth and productivity thereby contributing to South Africa’s socio-economic development and competitiveness.

Our Enterprise Development and Support Programmes, the Workplace Challenge (WPC) Programme, which improves the competitiveness and sustainability of enterprises will be scaled-up to aid South Africa to achieve a productive high-income economy which is globally competitive. We acknowledge (and it seems we are joined by many who have hitherto been reluctant due to ideological fixations and other challenges I will not go into) that, Productivity SA’s strategic role and centrality in contributing to the Economic Reconstruction and Recovery Plan during and post COVID-19 pandemic has become critical, more so with workers losing their jobs due to retrenchments.

Secondly what is critical is that the Department of Employment and Labour/UIF has resumed the allocation of funding (with over R104m allocated for the 2020/21 financial year) towards the Business Turnaround and Recovery (BT&R) Programme to support companies facing economic distress. This allocation will go a long way in enabling Productivity SA to respond to the calls for providing turnaround strategies and plans to restructure and improve the productivity and operational efficiency of the companies facing economic distress to save jobs or minimise the retrenchment of employees, particularly in these difficult times during and beyond the COVID-19 pandemic. We need everyone to ensure that we work together in making timely and necessary interventions in businesses, especially SMMEs so we can save jobs. While these funds are far from sufficient given our hugely expanded role, first in 2015 and now when the Department was renamed to include Employment at the beginning of His Excellency, President Ramaphosa, the Department knows this, and the Parliamentary Portfolio Committee Chair just over 5 weeks ago pledged to see to it that we get the attention we deserve. In the meantime, we must use what we have and make it count!

The outbreak of the COVID-19 pandemic coupled with the advancement in technology presents us as a country with an opportunity to place productivity at the centre of the country’s long-term competitiveness and economic activity and recovery. The pandemic, which has devastating effects on our socio-economic systems and the labour market is also creating an important opportunity for leadership in government to create an enabling environment and partner with leaders in business and labour to take decisive and urgent action to turn things around. Leadership has never been needed like it is now. Implementation rather than talking, spinning and fancy words has no place right now! And the truth shall set us all free, not ideological hiding places that take us nowhere. Here in the ILO, we have in the last week and the current week been engaged in forward looking and progressive productivity oriented and interventionist decisions to respond to the Covid economic devastation and ensure decent work and dignity for our people. We cannot ask for new thinking without having the boldness to act differently. We are also having a growing realisation that informality needs to be tackled differently via a wide array of innovative tools that go beyond transitioning people from informality to formality. This is not working and cannot work going forward. The majority of the developing world, including South Africa is in majority informal economies. A different approach is required that achieves the same outcomes, but engaging and consulting more with those in the informal sector, not talking at them in a patronising manner, in a textbook theoretical manner. Let us have real developmental application localised for our conditions not imported or imposed.

This symposium should serve as a platform for us to collectively as government, business, academia, labour and civil society collaborate in crafting a framework for implementing the Economic Reconstruction and Recovery Plan. This requires of diligence, and if we fail we stand exposed to a risk of at least 1.5 million South Africans losing their jobs and many more millions facing starvation and joining the large numbers of the poor we have in abundance. With these words, ladies, and gentlemen, I welcome you to the Productivity and Competitiveness Virtual Symposium.

May I also take this opportunity and invite you to follow us on the various social media platforms @productivitysa on twitter as well as follow me on @Tzoro1 without hesitating to offer suggestions and feedback that can assist us in building a better sustainable South Africa. We are also building a strong presence on LinkedIn. I promise you that my colleagues at Productivity SA will respond within 24-48 hours even if it is to refer you to where you can be assisted when it is not us.

Thank You.