/ 28 May 2010

Service delivery dilemma

Service Delivery Dilemma

President Jacob Zuma was shocked by what he found during an impromptu visit to the Sweetwater informal settlement, south of Johannesburg.

He lamented the abject poverty of Busisiwe Mlotshwa, mother of six, who survives on the R200-a-month social grant paid ‘for” her youngest child. It’s an unfortunate set of circumstances that is repeated in thousands of ‘homesteads” in informal settlements across the country.

Poverty remains despite a burgeoning social grant system and ongoing regulatory intervention aimed at transforming society.

How poor are we?

The University of Stellenbosch’s department of economics concluded, after a detailed analysis of Statistics South Africa’s Income and Expenditure Survey of Households 2005/06 and General Household Survey 2006 that 47.1% of the country’s population consumes less than the ‘lower bound” poverty line. These households spend less than R322 (in 2000 prices) a month on essential food and non-food items.

The University of South Africa’s bureau of market research has since confirmed the fi ndings. They say the government has made little headway in eradicating poverty and that 2.35-million adults earn and survive on less than R50 000 a year. In absolute terms, 75.4% of South Africa’s population remains ‘poor”.

The best thing that could be said about the situation, Standard Bank economist Danelee van Dyk says, was that the poor weren’t getting poorer.

The national treasury wants to reduce South Africa’s Gini coefficient (a measure of relative equality, where 0 means total equality and 1 means one person owns everything) from 0.66 today to 0.59 by 2014.

And the only way to achieve this lofty goal is to reduce unemployment through improved skills and additional private-sector investment.

Poverty and unemployment are closely correlated. Statistics SA’s quarterly Labour Force Survey (LFS) is a chilling read. The first-quarter 2010 LFS assesses the employment status of 31.35-million people aged between 15 and 65 years.

At March 31 2010 there were 17.113-million economically active citizens of whom 12.830-million were employed and 4.310-million unemployed. The balance comprises discouraged workers and adults not actively seeking jobs.

The country’s official unemployment rate stands at 25.2%. ‘This is the highest level of unemployment recorded in South Africa in at least five years,” says Kevin Lings, economist at StanLib.

Job losses over the first three months of this year amounted to 171 000, and stretched to 833 000 over the past year. Of greater cause for concern is that 140 000 of the latest losses were in the formal sector.

‘Overall South Africa’s unemployment rate remains far too high by historical and international standards, and clearly contributes to the social tension and anguish experienced in South Africa on a daily basis,” Lings says.

He echoes the sentiment expressed by politicians, economists and Joe Citizen on a daily basis: increasing the number of employed South Africans must be our number-one economic, political and social objective.

But is government policy aligned with this objective? Job creation features prominently in all spheres of local and national government, but has been hampered by the ongoing obsession with headcounts and transformation.

Midway through 2010, South Africa’s employment landscape is littered with race-based legislation and terms one seldom encounters in developed economies.

We have the Employment Equity Act 55 of 1998 that dictates the percentage of people of a certain race, sex and level of disability a company must employ.

We use terms such as ‘fronting” and ‘window dressing” to describe predominantly white-owned businesses’ attempts to subvert laws they believe are grossly unfair.

Decades after the end of apartheid, we live in a country that requires residents — albeit voluntarily — to indicate our race when we take up permanent employment.

The Employment Equity Act requires us to distinguish between designated employers, defined as those who employ 50 staff members or more, or whose annual turnover exceeds that stipulated in Schedule 4 of the Act, and designated groups include blacks (Africans, coloureds and Indians), women and people with disabilities.

Ironically, some of the country’s most transformed institutions, including the South African National Defence Force, the National Intelligence Agency and the South African Secret Service are specifically excluded from provisions in the Employment Equity Act.

Business owners are left wading through reams of additional paperwork and processes instead of focusing on growing revenue and creating jobs. As an employer identified by the Act, you have to follow a three-step process to comply: prepare, implement and monitor.

You have to analyse your existing workforce, align your company employment practices with the Act, consult unions and employees, and create a ‘road map” for your firm to achieve its legislated employment-equity goals.

And you have to complete Employment Equity Report Forms (EEA2) and Income Differential Statement Forms (EEA4) while productivity suff ers.

There are indications, especially from recent comments made by the director general in the labour department, Jimmy Manyi, that the government is looking to step up its campaign to improve the level of compliance of companies with employment equity legislation.

When presenting the eighth annual Commission for Employment Equity (CEE) report to the portfolio committee on labour and the Cabinet, Manyi concluded that there were ‘no shining examples [of transformation]” among the country’s top 100 listed companies and bemoaned the continued ‘shortage of recognition of black people as competent”.

His solution to this problem includes amendments to the Act to penalise companies for not abiding by racial diversification in the workplace. ‘This law [as it stands currently] is very forgiving. The department and the commission are going to take a much less conciliatory view.”

Promises included naming, shaming and prosecuting companies that failed to ‘play ball”. Stronger employment equity legislation is not likely to prove popular with the business community and the additional compliance burden will most probably simply increase the cost of doing business.