Proposed Business Tax

Melanie Veness:  PCB CEO

I am very concerned about the proposed business tax, and more particularly about the implications of imposing it. At present the proposed tax is applicable in the metro’s only, but it would be naïve to assume that it won’t be rolled out into the various local municipalities if it is successfully implemented in the metro’s. Local municipalities are in dire need of funding, because the funding model for local government is inadequate, and there is no doubt that they will jump at the chance to improve their finances, and who can blame them?

My feeling is that we have a serious unemployment problem, and we need the private sector to create jobs to alleviate this unemployment. The focus from government should be on creating an enabling environment for business to operate in, stimulating job creation in the private sector, rather than for government to continue to employ.

Business is currently operating in an economically challenging environment, which is why the private sector is shedding jobs. To further burden business is ludicrous. My feeling is that cost-saving measures on the side of government would easily make the needed funding available. One simply needs to eradicate some of the wasteful expenditure. In terms of the national budget, the funding that would be raised from this additional tax is marginal, and could easily be redirected to the metro’s and local municipalities.

Since we’re talking about employment, it is interesting to note that while we have these high unemployment levels, we are also experiencing a severe skills shortage. According to Richard Pike, Chief Executive Officer of Adcorp Holdings, we are short of 216 000 managers, 178 000 professionals, 432 000 technicians and about 400 000 skilled sales and services staff. We have the people, they just aren’t sufficiently skilled.

He made the point that previously, mines trained a significant number of artisans and engineers, as did the railways and defence force. Back then, on the job training was common. Most training seemed to stop with the introduction of the skills development levy. Money was diverted out of training in to the national skills fund. There is currently about R5.2 billion trapped in this fund which, to my mind, is an appalling state of affairs. Business is being asked to come to the party to train artisans, because, and aside from the severe shortage of skills, the average age of a skilled artisan is currently 56!

It’s looking increasingly sensible to dismantle the SETAs, so that there is less red tape involved in training and to allow for training to be put back in the hands of business that, after all, knows better what skills are required.

On-the-job training is another concern. At the SACCI conference last week, Anne Bernstein said that we need to be realistic and honest about the environment that we are operating in. Having high minimum wages is idealistically attractive, but the reality is that people need to be skilled before they can demand these wages, and we need to look at ways of achieving the required levels of skill, while people earn some form of income.

In other countries, working long hours for low wages is often the only way for people to gain skills in order to grow into other opportunities. Consider that the unemployment levels in Newcastle are around 60%, and that, despite this, the Department  of Labour closed down several of the clothing factories, effectively cutting of the meagre income of the people working in these factories.

The fact is they can’t eat the ideology, and I am very pleased to hear about the progress that has been made in the clothing industry in this regard. The reality is that we need compromises, because we have no alternative if we are serious about addressing unemployment.   

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