Chairman opening address for the press conference for lifting suspension of the BT R programme

Programme Director
The Honourable Minister of Employment and Labour, Mr. Thulas Nxesi;
The Director General of Employment and Labour, Mr. Thobile Lamati;
The Commissioner of the Unemployment Insurance Fund, Mr. Teboho Maruping;
Leadership of organised business and organized labour
Members of the NEDLAC Temporary Employer Employee Relief Scheme Task Team;
My fellow Productivity SA Board members;
The Executive Management and Productivity SA staff;
Members of the media.

Good afternoon

Honourable Minister, ladies and gentlemen, and members of the media, please allow me to take this opportunity to thank you for honouring our invitation to be part of this press conference.

On Saturday 20th June 2020, Productivity SA along with the global Productivity Movement fraternity celebrated the World Productivity Day 2020. Unfortunately, World Productivity Day was observed at the height the national lockdown necessitated by the COVID-19 pandemic, with businesses and society in general figuring new ways of doing things to be productive and survive.

Furthermore, South Africa is also facing a scourge of femicide which has reached unprecedent levels in the country.  We cannot be productive as a nation whilst waging a war against our women and children. The scourge of femicide must stop. We should instead be in a position whereby we channel our energies to being productive and wage a war against poverty, unemployment and inequality.

On 16th of June we celebrated  Youth Day, honouring and paying tribute to the memory of young people who confronted the brutal apartheid system for their emancipation. BUT, this celebration is short-lived when millions of young South Africans are not productively engaged, Not in Education, Employment, or Training (NEET). Something urgent must be done to restart the economy to improve our livelihoods.

In the same week on the 16th June,(which we launched on the 19th of June) the Institute of Management Development released its World Competitiveness World Book 2020, which paints a bleak picture of South Africa’s overall global competitiveness (both in terms of ranking and Competitiveness Score / Index Value). Our global competitiveness ranking has dropped yet again, three points from 56 in 2019 to 59 in 2020 and the competitiveness score/ Index Value is shockingly low at 45.163, which is way below the competitiveness “Frontier” of 100 (the aggregate ideal across all factors of competitiveness).It may help to share that we are 4 positions from the last country at 63.

The Competitiveness Score/Index Value falls far short of what is necessary for the country to respond to the challenge of realising full and productive employment and creating decent work for all, while delivering healthy returns for investors, in our pursuit to meet the SDGs, specifically Goal 8 for purposes of the Department of Employment and Labour and social partners.

South Africa’s productivity growth, competitiveness and economic growth has been getting progressively worse year on year, and will surely worsen even further following the outbreak of the COVID-19 epidemic. Our Labour Productivity (LP) and Multi Factor Productivity (MFP) recorded a decline in growth in 2019, with LP at -0.9 percent and MFP at -0.4 (Productivity Statistics Report, 2019). These factors paint a picture of an economy that is on a downward spiral and requires urgent interventions to reset and restructure it to protect existing jobs and to create decent jobs for the millions of unemployed South Africans, specifically our youth. I like using the example attributable to Einsten, that doing the same ting repeatedly,(failing every time) with resultant disastrous outcomes, while hoping for a different outcome, is a test for insanity.

The outbreak of the COVID-19 pandemic coupled with the advancement in technology, are adding to the disruptions, with devastating effect on our already fragile socio-economic and labour market systems and infrastructure. The pandemic hit South Africa at a point when our productivity levels are low, which situation is compounded by our lack of appreciation of the value of, and accountability for productivity (which is defined as the efficiency and effectiveness with which labour, capital, materials, energy and other resources are combined and utilised in an environmentally and socially sustainable manner to produce quality goods and services for the satisfaction of human needs).

The COVID-19 pandemic resulted in almost all businesses scaling down operations, resulting in most companies unable to meet their financial obligations including payment of salaries, therefore, seeking relief either in the form of the COVID-19 Temporary Employer/Employee Relief Scheme (TERS). Most businesses, specifically SMMEs have closed down and retrenched workers, thereby, exerting more pressure on our social security systems, including the UIF.

Signs are already there that, the pandemic is worsening existing conditions, with the closed firms and absent workers dropping productivity. Some distressed firms are either in business rescue or filing for liquidation, which situation was in the horizon, particularly since the country was already in recession. The firms’ capacity to produce and/or operate is further leading to reduced consumer spending, either because of reduced wages or unavailability of goods and services during the National Lockdown.

Compounding our low productivity growth, competitiveness and economic performance is, amongst others, the lack of a productivity-enhancing national policy and strategy or framework and lack of policy cohesion to expand the productive assets in our economy. This is mainly due to inadequate investment in the skills of people and in an environment where all firms across priority economic sectors have a chance to succeed, a lack of a productivity culture and accountability thereof to unlock the productivity potential of the country at all levels (national, sector and at enterprise level). The continued lack of productivity-enhancing national policy and productivity culture as essential instruments for economic transformation undermine our country’s capability to unlock its productivity potential for sustained economic growth and competitiveness.

All these challenges were happening at the time when the Business Turnaround and Recovery Programme (formerly known as the TAS Programme) was suspended with effect from the 19th March 2018, as a result of the Productivity SA Board resolution dated 22 February 2018. The suspension was necessitated by an unavailability of funds since early 2017. During all this time, Productivity SA was rendered unable to respond to the calls to provide 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.

Honourable Minister, ladies and gentlemen, and members of the media, today the Board is proud to announce the lifting of the suspension of the Business Turnaround and Recovery Programme (BT&R Programme). This announcement is on the backdrop of the Department of Employment and Labour, having through the Unemployment Insurance Fund provided for same in section 5 (d) of the UIF  Amendment Act, pledged just over R104 million for the programme in the next nine months, and the first tranche of R23 million has already been transferred to Productivity SA. This is a good start.

It has been a battle to arrive here and we thank our key stakeholders, including those who attended the Annual General Meeting (AGM) on the 20th September 2018. The AGM resolved that, if the then Minister of Labour does not resolve the funding challenges experienced by the Entity, the board should escalate this matter to NEDLAC and Parliament. The resolution of the AGM was accordingly implemented.

We also thank Minister Nxesi for making the funding of Productivity SA a priority upon his appointment as Minister of Employment and Labour. Minister, we are here today witnessing your commitment to ensuring that the BT&R Programme is adequately funded. The event today forms part of the fulfilment of the resolutions of the Jobs Summit and the social compact by NEDLAC social partners that, supporting initiatives aimed at the preservation of existing jobs is as important as creating new jobs, and that Productivity SA should be better resourced and capacitated to perform these functions. I of course say it is good start, because this in no way addresses the Covid-19 related adverse consequences we expect, but coincides with same and there we shall begin to assist with business continuity and interventions that can make a difference…far more than R104 million will be required to do justice.
The allocation of funds for implementing the turnaround strategies will go a long way to enabling Productivity SA to fulfill its mandate as outlined in section 32 (g) of the Act, and objectives of the Presidential Jobs Summit Framework Agreement to save jobs and create conditions conducive for job retention and creation.

The Board today commits to ensuring that Productivity SA plays its part as a strategic labour market institution, to provide 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. We invite social partners to work collaboratively with us on this journey.

We further announce that schemes and programmes providing for turn-around strategies and Temporary Employer Employee Relief (formerly known as Training lay-off Scheme) are available and companies facing economic distress can approach Productivity SA for support. The intervention delivers turnaround and contingency plans for companies that are faced with the risk of financial ruin, extensive job loss and sustainability challenges, which is in line with Productivity SA ‘s vision to lead and inspire a productive and competitive South Africa and its mission to improve productivity by diagnosing, advising, implementing, monitoring and evaluating solutions aimed at improving South Africa’s sustainable growth, development and employment through increased competitiveness.

We call upon all (government, business and labour) to join hands and create conditions conducive for job retention and the creation of full and productive employment which in turn leads to decent work.