Productivity SA is critical for South Africa‘s economic restructuring and recovery plan

Commentary by the Business Day published on 20 November 2020 lamenting the CCMA budget cut asserts that, “Productivity SA is one of several insignificant and ineffective agencies of the Department of Employment and Labour that should be re-evaluated and, questioning its role and whether the entity is still necessary.

The Business Day commentary asks “What for instance, is the role of Productivity SA? Productivity SA and CMMA are agencies of the Department of Employment and Labour and by implication, the commentary seemingly seeks to suggest that Productivity SA should cease to exist, and the entity’s budget shifted towards other institutions like the CCMA.

I would like to take this opportunity to enlighten South Africans and beneficiaries (business, labour and government) of the services of Productivity SA (which has been in the business of creating and delivering value for enterprises over the past fifty years) and the role of a National Productivity Centre as a strategic labour market institution in any economy. As a way of introduction, I would hasten to refer our colleagues at Business Day to the ILO (International Labour Organisation) Centenary Declaration for The Future of Work, adopted in June 2019, which mentions “productivity” 11 (eleven) times, including an emphasis on productive employment creation, the role to be played by the private sector as a principal role player in the preservation and creation of jobs and the achievement of global social justice. South Africa is a founding member and one of the 187 Member States of the ILO, with all its laws and institutions being fashioned on the ILO’s social dialogue and unique Tripartism as the only such special agency of the UN in the world.

As a start, I would like to emphasise the role of Productivity SA in the South African economy and the labour market by outlining its legislative mandate. The entity is established in terms of section 31 of the Employment Services Act, No. 4 of 2014 as an entity of the Department of Employment and Labour with the responsibility to fulfil an economic or social mandate of government, which is to promote employment growth and productivity. Given South Africa’s low productivity growth and competitiveness which has been regressing over the past ten years, resulting to our now ranking 59 out of 63 countries (Institute of Management Development World Competitiveness Yearbook, 2020), the country should do all in its power to promote productivity holistically across sectors and at all levels (national, sector and enterprise) to inculcate a productivity culture and mind-set as well as driving accountability for productivity performance to improve our economic growth. A cursory look at the top 10 countries of the IMD Global Competitiveness Index, led by Singapore for two years in a row, would be informative in this regard. We could propose, if possible run a joint Business Day/Productivity SA webinar or digital conference to look into this as an idea.

To achieve the recently unveiled Economic Restructuring and Recovery Plan, South Africa should focus its energy on enhancing the capability of enterprises through skills development and training programmes and targeted Enterprise Development Programmes to preserve existing jobs and create new decent jobs which we require the most if we are serious about alleviating poverty, inequality and unemployment. This, together with our efforts to promote localisation and industrialisation focusing on the development of SMMEs along the development of rural and township economies cannot be achieved without an effective and adequately resourced Productivity SA.

Productivity SA has, through the Workplace Challenge Programme in the 2019/20 financial year, provided competitiveness improvement services to 100 companies with 3 Industrial/Sector Clusters established (Forestry, Footwear & Leather, Metal and Engineering), 6 Kaizen Clusters (Geographical), 22 companies supported in the SEZ’s and 17 companies supported in the Industrial Parks. The enterprises supported through the programme are capacitated to adopt world-class productivity enhancement best practices focusing on products, processes and people. Through these interventions we were able to preserve over 6170 jobs, while simultaneously enhancing the sustainability of the enterprises involved, with the potential of creating more productive employment.

Productivity SA has for the last few years partnered with the Sunday Times, which is part of the Arena Group and Lebashe Holdings in staging the Productivity Awards every October, which incidentally is Productivity Month, which support South Africa’s strategic objectives in scaling up efforts to promote long term industrialisation and transformation of the economy targeting enterprises of all sizes within the priority productive sectors. This is most needed as we implement the Sector Master Plans as a country, therefore, it is a misconception that the entity’s services are not necessary and/or that it is one of several insignificant and ineffective agencies of the department.

This misconception overlooks the very fact that contrary to this notion, the Department of Employment and Labour (indeed all throughout the world) should be elevated on the packing order of governments, to be on the same level, if not higher than the main decision-makers such as “Finance”, “Trade, Industry & Competition” and others if we are to be truly honest to the rhetoric that “we should be building economies that are sustainable and resiliently human centred”(again, I would like to refer to a decision of the Governing Body of the ILO taken on the 14th of November just over 10 days ago in Geneva, in ensuring an impactful response to the Covid pandemic).

Are the entities/agencies as effective as they should be currently? This is a different discussion. However, throwing out the baby with the bath water and/or being penny wise moves us beyond dangerous to “symbolic killing of our economy.”

It is worth highlighting that, the outbreak of the COVID-19 pandemic which necessitated the national state of disaster and the nation-wide lockdown, hit South Africa at a point when most of the macro-economic and labour market issues, including our productivity growth and competitiveness, which matter most, were at an all-time low (and still are) for an economy that should grow sustainably. In 2019 we recorded a decline in productivity growth, with Labour Productivity at -0.9 percent and Multi-factor(holistic productivity) Productivity at -0.4 percent (Productivity Statistics Report, 2019).The crisis resulted in productivity, especially in some formal and productive sectors of the economy coming to a halt, with some SMMEs shutting down and retrenching workers, and some scaling down their operations to stay afloat. This is one time in our history after the 2008 global economic crisis that we require the Business Turnaround and Recovery Programme offered by Productivity SA.

To assist these enterprises out of economic distress requires of Productivity SA to intervene through its Business Turnaround and Recovery Programme, which is implemented in partnership with the CCMA. Through this programme we provide turn-around strategies and plans to restructure and improve the efficiencies and productivity of businesses facing economic distress to be sustainable, competitive and create conditions conducive for job retention and creation. During the 2019/20 financial year, we together with the CCMA were involved in the Single Adjudication Committee for Temporary Employer Employee Relief Scheme (TERS) Scheme, and have adjudicated and recommended 22 enterprises employing a total of 4101 employees at a total rand value of over R 145 211 225.41 for accessing benefits through the scheme. Plans are afoot to increase the pipeline through intense national advocacy campaign in the 2020/21 FY.

Similarly, to the CCMA, we have had severe budgetary cuts, when we should be receiving at least three times the funding we have for our expanded role since 2015, for us to have far more impactful interventions in the economy. We have calls from SMMEs and Co-operatives to do more at local and regional level because of the demonstrated efficacy of our interventions via our Programmes, but unfortunately our cries over the years have fallen on deaf ears. Together with the CCMA, we can do far more, as well as collaboratively with all the so-called several “insignificant and ineffective agencies” of the department. These programmes which are fundamental to unlocking South Africa’s productivity and potential for sustained competitiveness and economic growth should be supported and Productivity SA should be adequately funded to achieve its mandate. What we suggest you call for is the re-engineering and re-calibration of the economy and for the Sate President of our country to lead from the front as a Productivity Champion and Ambassador. This would have the resultant betterment of “ease of doing business” to move us up from number 84 out of 160 countries, simultaneously improving our position from 59 out of 63 countries on the IMD Global Competitiveness Index, ensuring productive growth of our economy manifested in sustainable enterprises and lots of employment that brings dignity and joy to all South Africans.