This week, I have included sections of our Chamber’s Economic Policy that deal with small business development and labour.

SMME DEVELOPMENT

Corporate business entities, having mostly reached a mature stage in their development, have limited capacity to expand locally and create additional employment. In any event, best business practice in such large companies includes the increased use of technology and sophisticated production techniques which require investment in plant rather than people. Consequently, the potential for job creation is relatively minimal. Within the micro, small and medium sectors, however, there is considerably more scope for growth and expansion. This is acknowledged internationally. South Africa does not have the benefit of an SMME sector which is optimally vibrant and dynamic.

Despite numerous programmes and strategies, including institutions to implement these, growth in this sector has been pedestrian, a pace which reflects a theoretical commitment which has not been fully supported by practical enablement strategies. Emphasis on financial support and advisory services, though extremely important, has failed to overcome the inhibiting nature of the regulatory framework which has been found in more than one study to be restrictive to the growth of small business. The Chamber believes that the various regulations and statutory provisions which make it more difficult for the small business operator in this country than in many others require urgent attention so as to create and sustain an environment in which micro, small and medium enterprises have more leeway in which to grow. Restrictive elements, which have far less impact on larger companies in which specialists may be employed to deal with these matters, include tax regulations, labour laws and other provisions which require complicated paperwork.

LABOUR

The Chamber supports the fundamental principles of the Labour Relations and the Basic Conditions of Employment Acts, for these, with some success, set out the foundations of a fair balance between the rights of employer and employee. Such balance is upset not by the legislation itself but by its implementation and, in particular, its interpretation. Compliance is severely compromised by ignorance and also by the legislations’ complexities. Exemptions made, ostensibly to ease the burden of compliance on small business employers, do little to encourage employment which is often perceived to be unnecessarily onerous.

The proliferation of so-called ‘casualisation’ and the use of the services of labour brokers points to a reluctance on the part of companies to accept the legal responsibilities of employment. The Chamber believes that there is a good deal more to employment than a weekly wage and a productivity target and regrets the fact that an increasing number of workers fail to enjoy the benefits of full-time, permanent employment in a particular workplace with working colleagues, benevolent management, career prospects and appropriate skills development, a relationship of trust and, at least, the traditional array of employee benefits.

The Chamber has the view that separate legislation for business enterprises of small, very small and micro sizes should be developed. While these should not compromise the fairness and equality of rights, they could reflect the particular circumstances which characterise the operation of businesses of these sizes. In doing this, it is believed, employment would be encouraged rather than discouraged. In particular, the Chamber is opposed to centralised bargaining as it applies to enterprises of these sizes. Agreements reached in Bargaining Councils which are then extended to non-parties by ministerial decree are often debilitating to the extent that small companies can no longer continue operating. Notwithstanding the right of companies to apply for exemption, these agreements often fail to take account of the specific difficulties of business operations of particular sizes, or of particular localities.

Andrew Layman: PCB CEO

This article appeared in The Mercury on the 6 August 2008