South Africans are commemorating the 2022 Youth month and International Productivity Day on 20 June 2022.

South Africans are commemorating the 2022 Youth month and International Productivity Day on 20 June 2022.

1. Introduction

South Africans are commemorating the 2022 Youth Day and Month (June) and International Productivity Day (20 June) in a country facing socio-political and economic ruin. Eight (8) critical Socioeconomic and Labour Market Indicators (GDP growth, Employment growth, Productivity growth, Global competitiveness, business efficiency, Income growth, poverty, inequality and informality) are showing - A RED FLAG.

There is no denying that we have consistently been on this downward trajectory since the global financial crisis of 2008 and, this is compounded by the COVID-19 pandemic and rapid technological changes associated with the 4IR. The situation has degenerated to unprecedented levels, disrupting our society and business models (supply chains and value chains), leaving millions of South Africans excluded, with high levels of unemployment, poverty and inequality as well as a cost-of-living crisis.

Productivity, which has been found to be the main factor driving growth and income levels, the competitiveness (of both enterprises and the economy) and income levels which are very closely linked to human welfare have consistently been declining since 2008. The continued productivity slowdown damaged the productive capacities of capital and workers, thus, impacting economic recovery and employment growth. The involvement of workers in work that is less productive expose them to exploitation and other vulnerabilities (including, not earning a fair income, less job security and social protection, lesser prospects for personal development and social integration, lesser freedom to express their concerns, inability to organise and participate in the decisions that affect their lives and equal opportunity and treatment. The decline in productivity also contributes to the reduction of the real value of salaries, and other forces included, impact the distribution patterns, the consequence of which being increasing income inequalities and reducing the share of labour income in national Gross Domestic Product (GDP).

South African SMEs (both formal and informal) which were already having to contend with a contracting economy and recent shocks from COVID-19 and measures such as lockdowns are also facing productivity and capability constraints, which impact their competitiveness and sustainability. These shocks caused significant economic damage and the consequent effects are to stay with us for a while. What is more worrying is that government and business interventions (including stimulus packages and measures to limit business failures and job losses) primarily focused on the formal sector, thus ignoring the informal economy and the most vulnerable businesses and persons in society. The impact on unemployment and business continuity due to the crisis, and the productivity and capability gaps as well as the neglect by policy makers on the SMEs (particularly those in the informal sector) was immediate and severe. Many SMEs (often found to be the least robust during times of crisis) shut down operations (approximately 290000) and some forced to cut back on business spending and scale down to stay afloat. This led to loss of profits and income as well as over 3 million jobs and, leaving many South Africans vulnerable. Added to South Africa’s sustainability challenges is its low competitiveness which has also been declining since 2009 and hit an all-time low to 62nd out of 64 countries in 2021 (IMD WCY, 2021). This situation (according to the IMD definition of competitiveness) reflects a country (and/or enterprise) that is incapable of managing the totality of its resources and competencies to increase the prosperity of its population or enterprises.

The uncertainty remains significant and the long-term implications of our inaction or apathy, with lawlessness and corruption on the rise, and millions of young people unemployed and remaining excluded are a recipe for and trigger for ‘a Ticking Timebomb’. Surely, with a youth unemployment crisis, having reached 63.9% in the 2022Q1 (with over 7,7 million OR 75% out of approximately 10 million young people continuing to bear the burden of unemployment and exclusion irrespective of educational attainment and most classified as NEET), our hard-won political democracy cannot survive and flourish in this environment and, the Key Indicators are glaringly warning us ‘We are breading a revolution’.

2. South Africa’s current socioeconomic and labour market landscape (a reflection on the 8 Key Indicators)

The COVID-19 pandemic and rapid technological changes associated with the 4IR hit South Africa when our economy was already on a slippery slope, and the situation has since degenerated to unprecedented levels disrupting our society and business models (supply chains and value chain), leaving millions of South Africans with a cost-of-living crisis. The continued productivity slowdown damages the productive capacities of capital and workers, thus, impacting economic recovery and employment growth.

The GDP growth declined from an average of 5.4% between 2005 and 2007, with the 2022Q1 figures released by Stats SA revealing that Real GDP grew by 1,9%, up from 1.4% in the 4th quarter of 2021 (this reflects growth way below the NDP target of 2.7% times in real terms). Year-on-year, the economy expanded by 3%, accelerating from a 1.7% growth in the prior period, and matching market forecasts. The economy is reported to be about the same size as it was before the pandemic, with real GDP expected to grow by an average of 2.1 % in 2022 (way below the NDP target of an average annual GDP growth of 5.4% over the period to 2030).

Productivity has been declining too, which contributes to the reduction of the real value of salaries, and other forces, including evolving market structures, and globalization are impacting the distribution patterns. Hence the wage growth has not kept up with growth in labour productivity, the consequence of which being increasing income inequalities and reducing the share of labour income in national Gross Domestic Product (GDP). The Productivity levels are also one of the key reasons why different countries enjoy different degrees of prosperity, with the most competitive economies showing higher levels of productivity than most developing countries. A reflection on South Africa’s competitiveness (as measured by the IMD) shows that its ranking has dropped 9 places from 53rd out of 63 countries in 2018 and hit an all-time low to 62nd out of 64 countries in 2021 (IMD WCY, 2021). This is at the backdrop of the country having recorded a reasonably good level of global competitiveness between 2000 and 2006 averaging below 40, the best being 37 in 2001 and 2005, respectively. This state of affairs reflects a country that is incapable of managing the totality of its resources and competencies to increase the prosperity of its population.

The economic growth and low productivity growth challenges have worsened many of the underlying issues surrounding Unemployment (including under-employment), poverty (including in employment), inequality (including social, economic, income, wealth, and political), and exclusion in the country. Unemployment remains a structural feature of our economy and employment creation has not transpired at the anticipated rate (noting the NDP target of 11 million jobs by 2030). We saw the unemployment rate reaching its highest pick at 35.3% (and 46.2% according to the expanded definition) during the 2021Q4 and dropping to 34.5% in 2022Q1 (45.5% according to the expanded definition, with the youth unemployment rate at 63.9%. The low growth and rising unemployment have contributed to the unacceptably high levels of poverty (with income poverty remaining a major challenge) and high inequality rates in the world (with a Gini Coefficient Index of between 0.65 and 0.68). The high levels of inequality have been clearly reflected in the recently released World Bank Report (2022) which notes that South Africa has the highest inequality rates in the world, ranking first (worst) among 164 countries in the World Bank’s global poverty database. According to the report, the country is characterised by “high wealth inequality and economic polarisation (particularly across labour markets)”, with wealth inequality higher than income inequality.

The business activities and efficiency, including management practices which determine an enterprise’s performance including its productivity and employment outcomes were significantly impacted by the COVID-19 pandemic and subsequent lockdowns during the 2020 and 2021 financial years. The impact on small enterprises (both formal and informal) is clearly outlined in a recent study by the Department of Small Business Development (DSBD) in collaboration with the United Nations Development Program (UNDP) revealed the. The study revealed that many small businesses (often found to be the least robust during times of crisis) were forced to cut back on business spending and scale down operations to stay afloat. The informal sector, which accounted for 8% of South Africa's GDP and employed at least 27% of the workforce, was the hardest hit. The findings also revealed that micro and informal enterprises that reopened after the lockdown was lifted were still far from regaining or achieving their pre-pandemic income or employment levels. The DSBD study is corroborated by Stats SA/QLFS (March 2021), which established that SMMEs decreased by approximately 290000 from over 2,653,424 (1,791,431 informal SMMEs) in 2019Q3 to approximately 2,363,513 by 2020Q3. The informal SMMEs were the hardest hit, decreasing by over 211276 to 1,580,155, with over 3 million jobs lost between 2020 and 2022.

Further challenges relating to low levels of business activity and efficiency in South Africa during the pandemic is revealed by Stats SA in its latest Annual financial statistics (AFS) survey, which shows that Net Profit Before Tax in the formal business sector tumbled by 33,4% (from R624 billion to R415 billion) in the financial year 2020 compared with 2019, and to its lowest since 2006 (R368 billion). Seven out of nine industries covered by the survey reported lower profit, with the business services and manufacturing reporting the largest decreases, with declines of R126,9 billion and R65,9 billion respectively.

Despite the challenges facing us, the most crucial aspect for South Africa to successfully benefit from its own greatest asset, namely its growing young population, is a good education and training system and job creation. We should capitalise on this greatest asset’s innovative capability and resilience for growth. Government and the private sector (including big companies and multi-nationals with their vast business expertise) should forge social compacts to utilise the existing policies, e.g. BBBEE (without being forced to do so) by investing and participating in solutions to provide meaningful employment and business development training and entrepreneurship support for young entrepreneurs. These potential entrepreneurs require start-up capital or better access to capital and, provides investors with the biggest opportunity to participate in creating an enabling environment conducive for entrepreneurship and sustainable enterprises (owned by young people) which are critical for securing future growth of South Africa.

South Africa also has economic infrastructure and network industries, including roads, harbours, telecoms, the largest and most extensive air and rail networks, and institutions of higher learning ranked amongst the best in the world etc. All we must do is to stop the destruction of this infrastructure and invest in maintaining it. Urbanisation is also one of the most powerful growth engines the world has experienced and is especially evident in South Africa. The higher density of the population allows for the creation of domestic markets, the demand to emerge and local entrepreneurs to develop in an economic environment that is much more business friendly. As the proportion of the population living in cities increases, so will productivity.

Furthermore, one can’t help but, marvel at the resilience of the masses of vulnerable South Africans who keep hoping that their plight will change for the better. For most, their hope is premised on the understanding that at some point in their lives after the democratic dispensation, it was possible for real GDP growth to reach an average of 5%. This hope is fuelled by the increase of the GDP by 1.9% in the 2022Q1 with the economy expanding by 3% Year -on-Year growth. The recent report released by Stats SA shows that over 370 jobs were created between the 2020Q4 and 2022Q1, with the manufacturing industry, which is a critical sector for our growth showing signs of growth (particularly the petroleum, chemical products, rubber and plastic products, food and beverages, basic iron and steel, non-ferrous metal products, metal products and machinery, parts and accessories) making a significant contributions to growth, increasing by 4.9%, and contributing 0.6% point to GDP, and contributing over 370000 jobs.

Further factors fuelling this hope is that great strides were made in reducing poverty up to 2015, the unemployment rate decreased to about 22% in 2008 from about 33% in 2002. By 2013, SMEs were slowly flexing their muscle, and have, without much fanfare, begun to account for 91% of businesses, 60% of employment, contribute 52% of GDP and slowly taken over more of the turnover pie, generating 16% of total turnover in the formal business sector, and expanding to 22% in 2019.

We should as a country recognise the true value of the informal sector and innovators in this sector to economic growth, and not assume that this sector exists because of joblessness and vulnerability alone. We should acknowledge that the informal sector does act as a safety net for the formal economy, thus allowing the unemployed and unemployable to find work or start their own businesses, boosting income and alleviating poverty. This sector also sources most of its goods and productive inputs from the formal economy, pays rent to landlords, and is clearly an important participant in the value chains of even large companies.
The informal sector should be supported (including through removal or relaxation of strict formalisation regulatory requirements which become a barrier and constraint to ease of doing business) because it fulfils and important role in the economy as it also offers employment opportunities for young people and women as well as supply goods and services in areas (e.g. townships, informal settlements and rural areas that are spatially distant from central business areas) that may be impossible or unattractive for formal networks. According to Statistics SA, the informal sector accounted for 5.2% of South Africa’s GDP in 2015 and employed 2 641 000 individuals (17% of all employed) in 2016. Other estimates place it as high as 15% to 18% of GDP, and this sector must be supported to grow.

However, policy makers should grasp that this hope is unsustainable, in the face of the persistent rise in the social ills. The social partners (government, business and labour) should forge social compacts and prioritise implementation of the National Development Plan and the Economic Reconstruction and Recovery Plan, which are our lodestar without quivering. The compacts should include a policy mix and programme interventions that address productivity (which is globally viewed, including by the UN- SDG8, the ILO constituents as articulated in the Declaration for the Future of Work and Productivity Ecosystem for Decent Work, as well as the Abidjan Declaration as a catalyst for creating decent work, inclusive growth and shared prosperity) holistically across sectors and at all levels -National (macro), Industry (meso), and Enterprise (micro) and, create an enabling environment for entrepreneurship and sustainable SMEs which will create profits and wealth, preserve jobs, and create decent jobs (NB. NDP target of 11 million jobs, 90% of which should be by SMEs by 2030). The engagements by social partners should further focus on reimagining policies and programmes for a more sustainable economic system, competitive and sustainable businesses, and a particular system of social structures and institutions. A new social order.

4. The Productivity Value Proposition

South Africa’s National Development Plan-Vision 2030 has as one of its goals ‘raising the living standards to the minimum required level which will involve various mechanisms, such as increasing employment (about 11 million new jobs, 90% of which to be created by SMMEs), incomes, productivity as well as through social protection and quality public services. This is achievable if a country addresses productivity wholistically across all sectors and at all levels - national (macro), sector (meso), and enterprise (micro). Increasing productivity growth requires collaboration and the active participation and unity of purpose of all stakeholders (government, workers’ and employers’ organisations), because, productivity improvement is the most effective way of ensuring long-term competitiveness (which is also the basis and measure in global markets), long-term business success, economic growth and, consequently, the primary source of improvements in living standards, tackling the challenges of unemployment and underemployment, the most sustainable route out of poverty, inequality, exclusion. Hence, productive employment refers to employment that yields sufficient income to allow the worker and his/her household a consumption level above the poverty line.

Therefore, raising productivity (which refers to how efficiently inputs -all factors of production combined are used to generate maximum output – goods and services of quality or create and deliver value) and ensuring that the productivity gains are equitably shared between business owners and investors (higher profits and shareholder value) and workers (higher wages and better working conditions) is of critical importance in efforts to reduce poverty, inequality, and exclusion. Productivity can be measured in terms of all factors of production combined (total factor productivity) or in terms of labour productivity, which is defined as output or value added divided by the amount of labour used to generate that output. Labour productivity increases when value added rises through the better use, coordination, etc. of all factors of production. Value added may increase when labour is working smarter, harder, faster or with better skills, but it also increases with the use of more or better machinery, reduced waste of input materials, or with the introduction of technological innovations. Productivity growth should be supported through Enterprise Development and Support Programmes including skills development, strengthening of labour market institutions, social dialogue mechanisms and through dedicated projects and programmes such KAIZEN and SCORE (sustaining competitive and responsible enterprises) etc.

4.1. Twenty-one (21) reasons why Productivity should be driven holistically across sectors and at all levels – National (Macro), Sector (Meso), and Enterprise (Micro)

4.2.1 The Value of Productivity for a country. Productivity and sustainable growth and development (GDP)
Sustainability means the utilisation of a unit of raw materials and energy in an economy in such a way that the consequent output is with minimum waste. Addressing productivity holistically as a nation allows for the creation of an enabling environment for sustainable enterprises and programme interventions to improve the ability of a nation to create and sustain an environment that maintains more value creation for its enterprises and more prosperity for its people. Productivity as a source of competitiveness
Productivity is considered a key source of economic growth and competitiveness and, as such, is basic statistical information for many international comparisons and country performance assessments. The concept of competitiveness has been applied by Michael Porter at a wide extend of competitiveness of enterprise and industry to national and global competitiveness, Porter and Schwab, define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country (Porter and Schwab, 2008). In other words, economies with higher competitiveness level are generally able to provide higher levels of income for their citizens (Vares et al., 2011). In view of Organization for Economic Cooperation and Development (OECD), the ability of a country in producing commodities and services for presentation in international markets is one of the most important dimensions of competitiveness (Razavi et al., 2011).

It is argued, including by the WEF and IMD that a competitive economy is a productive one. And productivity leads to growth, which leads to income levels, and improved well-being or prosperity. This leads to the belief that competitive economies are those that are most likely to be able to grow more sustainably and inclusively, meaning more likelihood that everyone in society will benefit from the fruits of economic growth. Therefore, productivity improvement is the most effective way of ensuring ongoing competitiveness, long-term business success, economic growth and, consequently, tackling the triple challenges of unemployment, poverty, and inequality. Productivity and Business Sophistication and Efficiency
Business sophistication is conducive to higher efficiency in the production of goods and services. In addition, higher productivity in the production of produce and services is a result of business sophistication. This, in turn, result in increased efficiency, thus enhancing a competitiveness of a nation. Moreover, business sophistication plays a key role in a country’s economy which means that it controls the quality of a country’s business networks and strategy of individual firms in general.

Business efficiency refers to how much a company or organization can produce as it relates to the amount of time, money and resources needed. In other words, a business's efficiency measures how well it can transform things like materials, labour and capital into services and products that produce revenue. Efficient businesses can create products, offer services and accomplish their overall goals with the minimum effort, expense or waste. By understanding business efficiency and the strategies for improving it, you can help your organization waste less effort and time, allowing it to run much more smoothly. Types of business efficiency- A business's efficiency can be measured in several different ways, such as: Return on investment, Process efficiency, Operational efficiency, Eco-efficiency, Energy efficiency, Labour productivity, and Financial efficiency Productivity and promotion of employment
The more productive the economy, the more its enterprises become competitive and sustainable as well as grow to preserve existing jobs and create new jobs. Productivity and poverty alleviation
High productivity packaged with sound distributional and development policies offers a route out of poverty and inequality. Productivity and labour standards
Productivity is a source of sustainable growth and have more potential in promoting decent working conditions, growth in living standards and quality of life than legislative mechanisms alone. Productivity growth and social dialogue
Workplace democratisation and social dialogue is crucial to all efforts aimed at improving productivity, in particular those that adopt the “high road.” A recent ILO story from Colombia illustrates very well how social dialogue and collective bargaining have greatly improved productivity in the garment industry. Productivity as enabler out of informality and inequality
Small businesses in emerging and developing (informal) economies face numerous barriers and economic constraints for their survival and growth. They continue struggling with new challenges in terms of cost, quality, delivery, flexibility, human resource development, barriers to transactions, property rights, contracting, business identity, raising capital and trading. The SMEs in the informal economy are relatively stagnant, employing mostly unskilled/ semi-skilled workers, struggle to transform their informal operations into established businesses, thus limiting their productivity and potential to create wealth as well as productive and decent jobs and to make a meaningful economic contribution.

4.2.2 The Value of Productivity for an Organisation or Business Productivity and profitability/revenue - Companies become competitive and experience an increase in profitability or revenue when they become less expensive to produce their goods and services (lower unit cost of production), improve the quality of their products and services, and speed of delivery, thus increased market share and higher profits/dividends. Productivity as a source of competitiveness and organisational sustainability - Profits can be reinvested for expansion and growth, thereby preserve existing jobs and create more productive employment and decent jobs or distributed to workers in the form of better pay and working conditions. Productivity and optimising resources - Managing resources (labour and capital) and improving workflow processes and systems offers a good opportunity to reduce costs, use resources to their maximum potential and increase output. Productivity and contribution to state revenue and social investment - Increased contributions to society with a higher tax quantum and contribution to social causes (CSI). Productivity and customer service - Improvements in productivity lead to improved efficiencies and reduced cost of products and services to customers, with customers given more time and attention, therefore, feeling the benefits. Effectively, when the customer is benefiting, the company benefits because delighted customers lead to happy managers and happy shareholders. Productivity and Waste and environmental impact - The environment suffers when resources (people and materials) aren’t used efficiently. Poorly designed buildings, workflow processes and systems, and organisational designs results in wasted time, money, and resources. When you reduce workplace hazards and optimise energy utilisation, you create a more pleasant and healthier working environment, which results in higher productivity and focus amongst employees and the mood of the people who work in the organisation.

4.2.3 The Value of Productivity for society and Workers Productivity and better wages and opportunities - Productivity and reduced employee burnout - Poor work organisation and time management, which may result in people having too much to do and not enough time to do it, can result in stress, exhaustion, or total burnout. Working more efficiently whether a reduction in time spent on daily processes or a reallocation of roles and responsibilities – results in people being able to cope better with their work- load and complete their responsibilities in the time allocated to them. This is a positive consequence for both employer and employee. Productivity and employee morale - Historically, the focus on Labour Productivity and not Total Factor Productivity led many workers to see productivity as a way to squeeze more work out of the worker and/or restructuring and job destruction. This vision has to change. When employees understand what improving their efficiency can mean to them, including reduced stress and increased control, well‐being and focus, they can then embrace the process and accept the benefits that can be gained. When employees reap the benefits of increased efficiencies, it usually improves their morale and commitment toward the company. Productivity and greater social mobility - Creating the opportunity for talent across the social spectrum to be recognised and developed can boost the economy, increasing both productivity and gross domestic product (GDP). One factor driving this relationship is the fact that improved social mobility should lead to an improvement in the match between people and jobs in society. Greater mobility means both that the talents of all young people are recognised and nurtured, and that the barriers to some jobs are reduced-these entry barriers exist because of biases in recruitment processes or inequality of educational opportunity. In a more socially mobile society, it is more likely that a job will be filled by someone with the highest level of potential to perform well in that job, rather than someone who may be less well suited but, for example, better connected. Evidence across a number of countries confirms that those countries with more social mobility have people better matched to job opportunities and a more productive workforce. This is consistent with the view that policies that increase social mobility-for example, through increasing equality of access to university education or the quality of primary education-can unlock the latent potential of high-aptitude individuals, enabling them to generate greater value in the economy in future than they otherwise would.

A recent study by cloud provider Citrix has revealed that those small businesses that allow their employees to work outside traditional office environs are seeing productivity increase by as much as thirty percent. These gains are being driven through the adopting of mobile work styles that free up employees to work whenever and wherever they choose. The research also indicated that the increase in productivity is expected to rise. Productivity and better quality of life - Productivity and increased worker engagement - More productive workers are usually more engaged in their work. Engagement is a result of a number of factors, which are often linked to the quality of leadership and management practices, the amount of autonomy an individual feels and the degree to which they feel in control of their work and workload. When employees take control to get their work lives organised, it usually leads to increased focus, commitment and engagement, or they will move on to another job role that they feel is more suitable for them. Productivity and Enhanced Employee Wellbeing - Another benefit of improved productivity is personal well‐being. Well‐being can be described as a state where you’re healthy, comfortable and happy. When you’re more in control of your workload, you can be more in control of your life, having time to include exercise, to rest when you need to relax. With less stress, you can listen to your body and give it more of what it needs.

Therefore, it is for the above reasons that, if government wants to resolve the growth challenges and the consequent challenges, it should commit to including increasing productivity growth and support for small enterprises as central objectives in national development strategies. Without productivity, which is a driver of long-term competitiveness being addressed holistically across all sectors and at all levels (at national, sectoral and enterprise) as part of our national development strategies, we will not be able to achieve full and productive employment and decent work. Equally so, we as a country will not be able to create added value and thus increase national wealth. Therefore, it is without a doubt that South Africa’s growth challenges and its inherent consequences shall not be resolved if both our productivity and competitiveness are low. Linked to the commitment to increase productivity growth should be a commitment to integrated support to Small and Medium-sized Enterprises.

Not only do we need resources and competencies but also the way in which we manage these two factors will determine our level of competitiveness. To be competitive we need to manage the value drivers in our economy (resources and competencies) rather than key performance indicators. For example, Mexico is focusing on value drivers to increase its competitiveness by improving its healthcare and educational systems and privatizing its public sector; Chile’s massive educational reform aimed at ensuring everyone has access to education means the country has less resources to develop its infrastructure, but education is an important driver of competitiveness.
The IMD/WCC typical competitiveness model starts with government. Good government entails good regulation, transparency (no corruption) and a focus on people (vision). Although jobs are created by the private sector, governments need to develop a favorable environment for companies to be able to generate jobs. Singapore and the United Arab Emirates are good examples of government models that have fostered such an environment. If we as a country that fail to provide this we are less likely to attract business investments. One other challenge we face as South Africa is poor infrastructure (among other things), which prevents many organizations from running their business here. Good regulation and infrastructure are essential elements for business creation. A good government does not imply a “big” government. Indeed, public sector size has been found to be negatively related to competitiveness. Furthermore, although taxes are important to increase competitiveness, what is needed is a taxation mechanism characterized by high revenues yet low tax rates.

5. Conclusion

Productivity – one of the cornerstones of a well-functioning economy ‒ thrives on social dialogue and national or workplace democracy and collaboration, sound management practices and attitudes, and capable and empowered people. If all these contributing elements are properly nurtured, without doubt, South Africa should experience economic, employment and income growth, as well as social well-being. Social dialogue and consensus are key elements to stakeholder collaboration and the cornerstone upon which partnerships are to be built for the productivity movement. At the centre of our programmes is the recognition that social dialogue contributes to the overall cohesion of societies and is crucial for a well-functioning and productive economy.

Productivity has always been recognised as a fundamental element for competitiveness and growth. Research has uncovered that an economy’s productivity determines the ability of that economy to prosper. With growth in productivity, an economy can produce and consume additional goods and services for the same amount of work. When productivity fails to grow significantly, it limits potential gains in wages, corporate profits, and living standards. Conversely, constant growth in productivity results in employment creation, higher compensation of workers, enhanced well-being and living standards as well as reduction in poverty and inequality.

What we need to know as South Africans is that a country cannot achieve productivity growth and competitiveness overnight. These should be addressed holistically as an integral part of our socioeconomic system, and be inculcated as part of our culture as a nation. Consequently, SA needs to relentlessly focus on fostering and instilling a productivity culture as well as underscore productivity as a vehicle for competitiveness and sustained inclusive growth and development by implementing a Nation-Wide Productivity Movement. “Productivity Movement” refers to the commitment and active involvement by the government, employers, and workers in activities to increase productivity. Productivity Movement aims to galvanise the country towards attaining higher productivity levels. Productivity movement emphasises the importance of “human aspects” or mindset change, hence the main thrust of the productivity movement is in creating widespread awareness of productivity in workplaces, among people and society. Changing mind-sets and instilling a productivity culture through hard work, discipline, and a work ethic that would boost higher productivity is what the productivity movement is all about.

Furthermore, South Africa has identified SMEs as a key component to advancing sustained inclusive growth and development, however, what is lacking is an Integrated Enterprise Development and Support Ecosystem which has at its centre programme interventions to boost productivity growth and overall competitiveness of the economy holistically across sectors and at all levels - national (macro), sector (meso), and at enterprise (micro). We are not as a country fully appreciative of productivity (which is acknowledged globally, including by the UN as per SDG:8 and the International Labour Organisation constituencies) as the single most driver of long-term competitiveness and sustained inclusive growth. The programme interventions to boost productivity growth and competitiveness of SMEs we implement at enterprise level should also bring everyone along together by promoting workplace collaboration and democratisation. We should invest in reskilling the workforce (including life-long learning) and boosting infrastructure if we are to be able to withstand global economic crises and/or recover quickly from the consequence of the COVID-19 crisis. The main thrust of our productivity and competitiveness framework should be the recognition of the vital role of productivity in promoting economic growth, employment creation, global competitiveness, improvement in standards of living and overall national development and prosperity.

It is incumbent of government to commit to an Integrated Enterprise Development and Support Ecosystem, with the aim of creating an enabling environment conducive for entrepreneurship and sustainable SMEs. The productivity and capability challenges facing SMEs should be addressed as a national priority if we are to achieve long-term competitiveness and sustained inclusive growth. We should also invest in the skills of its people and in an environment where SMEs, particularly informal businesses in the productive sectors have a chance to succeed.

Building a critical mass of Productivity Champions and/or Productivity Ambassadors is essential. Efforts to boost productivity and build a productivity mindset requires the availability of a critical mass of trained Productivity Champions and/or Ambassadors. Whilst Productivity SA has made some strides in this aspect, it is still not sufficient to produce the critical mass of ambassadors and activists required to drive the productivity movement. The continuous efforts and exposure to productivity skills and knowledge are imperative and unfortunately, they are hampered by funding constraints now.

Compiled by: Mr. Mothunye Mothiba (CEO of Productivity SA; and Dr Nandi Dabula (Executive responsible for Corporate Relations at Productivity SA