Job Creation

Melanie Veness:  PCB CEO 

Since the job creation challenge was put on the table by the President, I have been thinking about how best to make a contribution.  I think that we all agree that the private sector are going to have to create the needed jobs, and that the government will need to create the enabling environment for them to do so.

Since the majority of people in Kwazulu-Natal who need jobs are relatively unskilled and have a limited education, it has been suggested that manufacturing holds out possibly the best hope for job creation.  We either have to find a way to encourage existing manufacturers to expand, or we need to attract new manufacturers.

I have been talking to industrialists about the major barriers to growth (the jeweled path to job creation), and it seems to me that one of the greatest challenges that we face (aside from competitiveness issues relative to cheap imports)  is local government’s inability to  supply  an adequate and uninterrupted supply of water and electricity. 

This is due to a number of factors. Firstly, the model that local municipalities are expected to impose is seriously flawed and they simply are not able to generate sufficient funding to deliver on their mandate.  Add mismanagement, corruption and a severe skills shortage, and we face some rather challenging obstacles. Is it any wonder that our electricity and water infrastructure hasn’t been adequately maintained for many years? 

Prolonged power and water outages are par for the course in many areas. Going without water and electricity at home or in the office may be extremely inconvenient, but in the factory environment, it can be very costly and quite catastrophic.

When factories go down for a period of time, they have no alternative but to close and to declare short- time. This has implications for everyone – not only does the labour-force lose income and the factory production time, the factory loses money every minute that there is unproductive material and work-in-progress on the floor. Delivery dates get pushed out, and consequently so does invoicing, which affects cash-flow. There is also the real risk of losing future orders because of late deliveries.

Even short outages have major consequences for some factories – for example, plastic injection moulders that experience outages have to reject everything on their lines at the time of the power failure. Sometimes they experience three or more outages in a row, while technicians are trying to repair a fault.

This brings me to the very real issue of technical skills shortages. Electricity departments are being run without the very necessary skills of graduate electrical engineers. This means that very often it takes much longer than necessary to identify and repair faults and that infrastructure planning is inadequate. Not only is much of the infrastructure in very poor condition, but supply is often allocated where there is no capacity.

This is hardly an enabling environment, and if there isn’t sufficient capacity to meet existing demand, then attracting new investment is not really an option – cities would need to make a significant investment in order to receive a bigger block of electricity, and to upgrade existing substations.

With the best will in the world, manufacturers will not be able to come to the party as far as job creation is concerned, unless the operating environment is drastically improved. In fact, existing jobs are at risk.

Another barrier to employment is the proposed changes to the labour legislation. If implemented, these changes are almost certain to make mechanisation even more attractive and discourage employment.

Government and business need to come together to find solutions, otherwise the dream of a job for all will remain exactly that – a pipe dream.

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