Productivity and Competiveness Symposium, 23 March 2021, organised by Productivity SA
Thank you programme director for passing the baton on to me.
Let me start by acknowledging and thanking Mr Mothunye Mothiba the CEO of Productivity SA in whose good hands we are today as well as all the Productivity SA staff that have worked hard to put this event together.
Let me also acknowledge the other speakers, Prof Mthunzi Mdwaba, the chair of the Productivity SA board, but also a good friend of the ILO as the Spokesperson at the ILO for the International Organization of Employers. In this capacity, he is actually speaking for organised business globally.
Let me acknowledge Ms. Motlatsi Gaobacwe, Economic Research Manager of Productivity SA and not least for her excellent presentation just now on the 4th industrial revolution;
Let me acknowledge all you distinguished ladies and gentlemen who are part of the symposium; international development partners and national agencies that are participating today and are promoting the productivity agenda in South Africa, this includes my fellow UN colleagues;
Let me pay a special tribute to the entrepreneurs that are part of this event, who are running enterprises, employing hard working men and women, trying to be productive and survive in these troubling times.
Finally, let me acknowledge the Deputy Minister for Labour and Employment, the Honourable Boitumelo Moloi who will speak just after me. I have to confess this puts some pressure on me since, as an ILO director, I always need to ensure that ministries of labour are happy with my performance…
In case I forgot anyone, please do accept my apologies and let me say, “all protocols observed”.
Ladies and Gentlemen,
Productivity is our theme today. The focus on productivity have gained importance in recent years and especially the challenge of increasing productivity is a shared concern of ILO constituents, who see productivity as a catalyst for creating decent work, inclusive growth and shared prosperity.
As an illustration, just last week the second item of the agenda of the Governing Body of the ILO was in fact on “Decent work and productivity” and I want to spend a bit of time on this in my opening remarks.
Since 1919 when the ILO was established we have devoted many efforts to understanding the relationship between productivity and labour; between wages and productivity and not least of the relation between productivity and decent work. In fact, the first ILO Convention No 1 from 1919 on “Hours of Work in Industry” is at the heart of the debate since this convention was the first that regulated hours of working time.
Today, it is conventional wisdom that productivity and good working conditions are linked. As we are now entering the second century of the ILO as an organisation, the topic of productivity calls for a renewed and refocused attention. Even more so, because the economic and social devastation brought about by the COVID-19 pandemic – and the subsequent lock downs we have seen across the world, also here at home in South Africa - renders the issue all the more important.
Ladies and Gentlemen,
Productivity is recognized as a key driver of economic growth, employment creation and, in general, the development of standards of living in any country.
So, the question we have to ask ourselves in a forum like this today is really: How can productivity gains translate into decent work for all in a rapidly changing world of work? What steps must a country like South Africa take to increase productivity and in so doing ensure that productivity growth generates more employment, better working conditions and also results in wage growth, which in turn will lead to increased aggregate consumer spending and with that more demand for products, goods and services and so on?
What we see globally, is that there is little or slow progress towards a global convergence of similar productivity levels: microenterprises lag behind small and medium-sized enterprises, which in turn lag behind larger enterprise; informal enterprises lag behind formal ones; and developing economies lag behind developed economies.
In fact, a small enterprise in sub-Saharan Africa is 2½ times less productive than a medium-sized enterprise and 5½ times less than a large enterprise. Whereas in more developed economies the productivity gap between small, medium and large enterprises is much smaller.
Now, the troubling aspect of this is that in sub-Saharan Africa the majority of employment – and in South Africa to a certain extent – is in the small enterprise sector and in micro and informal economic units that are not productive. The low productivity of the informal economy is a major drag on aggregate productivity growth and results in persisting decent work deficits.
Therefore, bringing especially micro and small enterprises closer to average productivity would have a major development impact.
Whereas there is no one-size-fits-all, what we see globally is that the management practices are key determinants of productivity growth and that there is a strong positive correlation between good management practices and enterprise performance.
We also see that aggregate productivity – or what we call Total Factor Productivity - grows when existing firms become better at what they do.
The ILO’s own experience has made a major contribution to this growing consensus. The SCORE programme have demonstrated that improved workplace cooperation, quality management, clean production, human resource management and occupational safety and health all increase productivity. Better management also helps to lower accidents at work. And safe and healthy work places where production does not need to stop because of an accident are more productive.
Let me therefore also take this opportunity to thank Productivity SA for the partnership in South Africa on rolling out the SCORE programme to the garment and clothing manufacturing sector together with the National Bargaining Council for the Clothing Manufacturing Industry (NBCCMI). With funding from the European Delegation to South Africa, we are together implementing one of the 2018 Presidential Jobs Summit Inclusive Growth Interventions agreed by social partners.
In particular, at the Job Summit, social partners agreed that sound workplace relationships between workers and management contribute to the productivity and sustainability of companies. Productivity SA, NBCCMI and the ILO was then called upon to work together and the Productivity and Training Institute (PTI) of the NBCCMI to share its learning and lessons with other bargaining councils. This work is ongoing and next month on 15 April, we will have a knowledge sharing event with the department of labour and the implementing partners and with trainers and participating firms to take stock of the lessons learned and how to expand the programme to additional sectors.
I therefore look forward to continuing and expanding the partnership with Productivity SA to other sectors, but also to other African countries, which can learn from South Africa. In fact, last year in March, one of my last meetings before lock down was with Mr Mothiba to sign an MOU between Productivity SA and the ILO to collaborate on the implementation of productivity and competitiveness interventions in South Africa.
However, we went further than that since the agreement also involved collaboration with the Pan African Productivity Association (PAPA) of which Productivity SA is the Secretariat. We have agreed on three major items:
Firstly, to collaborate on productivity issues across Africa in the context of productivity related commitments of the 2015 African Union Declaration and Plan of Action on Employment, Poverty Eradication and Inclusive Development as well as African Union Agenda 2063.
Secondly, to support the African Union and the Regional Economic Commissions – such as SADC - to promote a culture of productivity, develop a productivity and competitiveness index for Africa or for selected RECs based on their interests and in the process strengthen the institutional capacity of PAPA to assist national productivity organizations
Thirdly, to collaborate on a mapping exercise of productivity initiatives and institutions across Africa to better understand the productivity movement across Africa.
Ladies and Gentlemen,
This importance of the productivity agenda for Africa was furthermore clearly stated and prioritized at the 14th African Regional Meeting in Abidjan in December 2019. At the regional meeting, African Member States debated the Future of Work Declaration, which had been accepted by the International Labour Conference 6 months earlier in June and subsequently developed and adopted the Abidjan Declaration on Advancing Social Justice by Shaping the future of work in Africa.
The Declaration recognizes that addressing the development challenges requires structural transformation through value-addition across the broad sectors of the economy and through improving productivity including strengthening the institutions of social dialogue, tripartism, productivity improvement and labour administration.
The implementation plan of the declaration subsequently prioritizes additional Measures to enhance productivity growth and seeks to ensure that ILO constituents design and implement policies and enterprise level interventions that lead to higher levels of productivity and improved working conditions in SMEs. The strategy is to address productivity from an eco-system perspective.
My ILO colleague Dragan Radic will address this a bit later today when he will talk about our new approach to productivity eco-systems, which was also discussed at the ILO GB last week.
In closing, I just want to stress the importance of this in the context of the African Continental Free Trade Area (ACFTA). All countries in Southern Africa have a large micro and small enterprise sector and as I mentioned before they lag behind in productivity. We also know that the member states in the Southern Africa region fall into different income brackets with Low-income countries being (Malawi, Mozambique, Zimbabwe), lower-middle income (Angola, Eswatini, Lesotho, Zambia), upper middle income (Botswana, Namibia, South Africa) and high income countries (Seychelles and Mauritius).
Why is this important in the context of the ACFTA? Because we know that informal firms are more vulnerable, fall in and out of poverty more easily, they don’t provide decent work, little or no access to social protection (such as health insurance or unemployment insurance) and they are not organised in business member organisations and other representative bodies that can speak on their behalf and provide services to them.
The countries in Southern Africa – or across all of Africa for that matter - have very different starting points in terms of being able to exploit the opportunities that the ACFTA offers depending on the composition of their enterprise population. Worst off are the micro firms and informal firms, then the small firms and best placed are the medium sized and larger firms.
I highlight this, because it is critical that we are cognisant of the very different needs of an informal enterprise with four workers and a medium sized enterprise with 75 workers so that we can provide the appropriate support that will allow them to exploit the opportunities of the ACFTA.
With those words, I want to thank Productivity SA for inviting the ILO to speak at this very important event and I wish for some very good discussion and deliberations during the course of the day.
I thank you for your indulgence.