Dr Jan Visser talks to Madeleine Wackernagel about why management and unions must co-operate if South Africa is to boost productivity
South Africa’s productivity is notoriously poor by international standards — the latest World Competitiveness Report puts us second-last out of 48 countries.
Not a good record, agrees Dr Jan Visser, executive director of the National Productivity Institute (NPI), which is hosting the World Productivity Assembly next month. “But productivity is an organisational issue rather than a national norm.
“One of the biggest problems in terms of raising productivity in this country is the lack of co- operation between management and unions. They tend to fight, not to support each other. Strike negotiations are a case in point — a perfect example of how not to work together.
“For too long, organisations have set their sights on creating profits for shareholders, as opposed to creating wealth that can be shared around more equitably.
“The aim now should be not how to cut down on the input and still increase the output, but how to get the most from your throughput. Good resources have to be used to their maximum potential, and that includes labour. But management, too often, lacks the skills and leadership to get the most out of the workforce in the most productive way.”
The NPI advises between 500 and 600 companies a year on enhancing productivity — the big issue at the moment being improving communication channels within companies.
“There is a great need for know-how at a management level, but we can’t just apply foreign techniques and experience willy-nilly. Our situation is quite different to that of the East Asian countries, for example. One fundamental principle is inherent in all the debates over raising productivity: unless we work together towards a common goal and a common vision, we will not succeed.
“That’s where the Asians got it right. Management offered a quid pro quo: workers would keep their jobs if productivity was increased. Thus, greater input translated into greater output; their exports boomed, and their standard of living improved.”
Foreign direct investment is the most effective way of transferring the skills South Africa needs, but so far that bricks and mortar capital has been outgunned by portfolio buying, as reflected in the balance of payments.
One of our biggest economic problems, the current account deficit has been in the red for the past seven consecutive quarters. The answer is to export more, says Visser. Competing on the international stage also means becoming more capital-intensive: “We can’t fight the world with last year’s production methods.”
But this raises the question of capital versus labour. With such a massive unemployment rate, can we really afford to become capital-intensive?
“Our first priority is to get the economy growing, then jobs will follow. Concentrating on labour- intensive production methods could be counter- productive as we become increasingly uncompetitive on international markets. But in addition, companies choose the capital-intensive route because they feel they are being held to ransom by the unions. They deliberately steer away from using more labour if they feel they cannot trust the workers to co- operate.”
Which brings us back to Visser’s original argument — the lack of co-operation between management and labour: “The whole industrial relations debate is focused on negotiating at a national level, but productivity takes place at an individual, organisational level. Companies are not skilled enough at bargaining, so they take the easier option of adopting national measures. This is counter- productive.”
And also helps to explain why the few tentative steps taken by unions and management to set pay increases in line with productivity targets have failed to lead anywhere.
“So far,” says Visser, “there has been a lot of talk and very little action.”
But South Africa is learning, with the help of international competition. “We fell behind somewhat during the period of isolation,” says Visser, “but already, managers are taking greater interest in overseas developments and applying them locally, albeit slowly.”
He hopes the World Productivity Assembly on September 3 to 4 will help to foster that enthusiasm: “It all boils down to education and training, one of South Africa’s biggest downfalls. In addition, we lack `productivity champions’ — people at the top who orchestrate change and so increase productivity from the bottom up.” Local and foreign specialists will be on hand to provide a lift.