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Thread: Are our Economic Polocies too strict?

  1. #1

    Question Are our Economic Polocies too strict?

    http://www.iol.co.za/index.php?set_i...3137671C943207

    The above article is the younger Mbeki giving his thoughts as to where the economy is heading. However as I read it, I notice that maybe we South Africans are maybe just a bit unreasonable in our expectations. Before you all jump on me, hear me out.

    Globally the trend seems to be that the sectors that are experiancing rapid growth are service related industries that require skilled labour, something we have in short supply here. And the only thing that can really create jobs and stuff are industries that in SA are really slowing down.

    Unfortunatly we are not isolated in this respect as becuase of dirt cheap labour in Asia, the major manufacturing opprtunities end up there. And though we have relatively cheap labour, we have a very regulated labour market. Now IMO this stems from when workers had no rights back in the day, and in our efforts to redress the situation, we now have a very labour friendly enviroment.

    Now don't get me wrong, I don't want us to have a situation like in China where workers are treated like crap, however if we are really serious about job creation in this global economy, we need to "loosen up" our labour regulations for major corporations to want to invest in plants here. The unions would not be happy obviously, but in the long term it would be to the advantage of their members.

    Any thoughts?

  2. #2

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    policies

  3. #3

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    Quote Originally Posted by blueghost_39 View Post
    policies
    My bad, can't seem to fix it though.

  4. #4
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    Why does he say professional salaries are "hugely inflated"? They're quite low by Western standards and obviously a skills shortage will push up the price of these professionals.

    The message should be clear, he warned. "If South Africa is to develop in the 21st century and get rid of endemic poverty and high unemployment, the elite in this country cannot continue to enjoy the standards of living of the middle classes of the West without the equivalent productivity, which is the case at present."
    Is there any evidence that the elite don't have the same productivity as their counterparts in the West? I mean the elite that actually do the job, not the government/political appointees. The obvious answer to this is that if the elite can't enjoy those standards of living they'll emigrate to where they can enjoy them, leaving the country in a worse situation.

    He seems to come dangerously close to advocating Marxist wealth redistribution policies etc. without quite saying it.

    I agree with you though sox63, the labour market is far too controlled to the point of being ridiculous, as are many other areas in the country. I think the root of the problem is the ANC's viewpoint of investment as a right, something that they're entitled to. They need to realise they're competing against the rest of the world and at the moment SA has very few competitive advantages to leverage, what we do have should be promoted, not stifled.

  5. #5

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    SA does need to loosen things up a bit IMO.

    I know people who have closed their businesses (and laying off their employees) because of the headaches that they were experieincing with staff. Now they have very small (1-2 empoyee) businesses and are much happier about their own lives.

    So yeah, loosen up, give the employers a break also sometimes and you will see more investment all around.
    GPSTravelMaps

    I rarely visit you guys these days...

  6. #6
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    Don't you think the government can perhaps offer tax breaks etc to foreign business to make investing to SA more appealing. Labour issues aside.

  7. #7

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    WRT labour, the situation is quite simple really.

    Deregulate labour and increase employment at the cost of wages, and grow the economy more quickly.

    or

    Regulate labour and increase unemployment allowing for higher wages, but accepting your economy is going to grow more slowly.

    Politically, both have implications and can lead to unrest, really depending on how wealth is distributed.

    When I studied economics, it struck me as highly ironic that we are competing with areas such as America and Europe (the developed world) in terms of exports, and were unable to compete with the developing world despite our huge labour surplus.

  8. #8

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    Agreed- we seem to have developed world labour law, developing world labour market.#

    How about actually educating the population and start building a service orientated economy?

  9. #9

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    Quote Originally Posted by Ady View Post
    Don't you think the government can perhaps offer tax breaks etc to foreign business to make investing to SA more appealing. Labour issues aside.
    I think those are already in place, especially in the automotive industry. However any company will tell you that one of the biggest cost, if not the biggest, is HR related issues. You have to maintain large HR departments simply to make sure you comply with all the labour acts, and policies. These HR people, though important, do not directly contribute to increased revenue.

  10. #10

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    Quote Originally Posted by reech View Post
    Agreed- we seem to have developed world labour law, developing world labour market.#

    How about actually educating the population and start building a service orientated economy?
    As for Education, due to a number of factors, is only just beginning to take off, and thus will take time until SA has a large workforce that is well educated.

    But we are talking about policy changes we can implement right NOW that will speed things along. The more gainful employment we create the less drag on state resources that currently are applied to grants and so on. Lets not foorget it would contribute to decreasing that hot topic "crime"

  11. #11
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    There is no reason for the average worker to accept any change that would be to their immediate detriment unless you can show them how they will benefit. And that benefit would have to materialise quite quickly. Are they going to care that there will be a lot more jobs in 10 or 20 years? That's assuming reduced regulation does not simply result in more money being siphoned upward, i.e. halve the workers' income, double your workforce, increase your output and profits, but keep all the money for yourself.

    Perhaps a change that allowed small companies, say those that employ fewer than 50 people, more labour flexibility while continuing the current labour regulations for larger employers. Although then what incentive is there for the small business to grow - they have the benefit of being able to pay very little and reap larger profits; simply employ 50 people for the price of 25.

  12. #12
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    Quote Originally Posted by sox63 View Post
    As for Education, due to a number of factors, is only just beginning to take off, and thus will take time until SA has a large workforce that is well educated.
    What incentives do companies currently have to educate their staff? Are there programmes in place to identify individuals who should receive training?

    Quote Originally Posted by sox63 View Post
    The more gainful employment we create the less drag on state resources that currently are applied to grants and so on. Lets not foorget it would contribute to decreasing that hot topic "crime"
    That probably wouldn’t change. With supply outstripping demand there is no incentive to pay much - will people take on multiple jobs or will they receive support from the government to make up the gap.

    Quote Originally Posted by sox63 View Post
    However any company will tell you that one of the biggest cost, if not the biggest, is HR related issues. You have to maintain large HR departments simply to make sure you comply with all the labour acts, and policies. These HR people, though important, do not directly contribute to increased revenue.
    For a small company this might be the case because they may require a dedicated HR person now whereas in the past it was an adhoc position. Even though the policies are not complicated they may now need someone to oversee their implementation. For a large company this should not be an issue. They have HR people anyway, and the policies are not complicated.

    HR people should be contributing by being responsible for things like developing and implementing staff development. If in all, but small businesses, they exist solely to oversee labour regulations, then there is something drastically wrong, and it isn't the labour regulations.

  13. #13

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    Quote Originally Posted by sox63 View Post
    As for Education, due to a number of factors, is only just beginning to take off, and thus will take time until SA has a large workforce that is well educated.

    But we are talking about policy changes we can implement right NOW that will speed things along. The more gainful employment we create the less drag on state resources that currently are applied to grants and so on. Lets not foorget it would contribute to decreasing that hot topic "crime"
    Unfortunately, while our education is certainly more widespread than it was, it is still not of a good quality. If anything, we are losing competitiveness in this area. Again, is this the product of an overly liberal government allowing discipline to lapse?

  14. #14
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    Quote Originally Posted by sox63 View Post
    But we are talking about policy changes we can implement right NOW that will speed things along. The more gainful employment we create the less drag on state resources that currently are applied to grants and so on. Lets not foorget it would contribute to decreasing that hot topic "crime"
    The unions currently have far too much power. Changing legislation is not going to make a difference to the low skilled worker or how many are employed, or how much they get paid. You're still going to get a whole mine/manufacturer being closed by a strike over shop stewards being fired for stealing (or for bigger increases, or for higher minumum wages or maximum working hours)
    When did ignorance become a point of view ?.

  15. #15

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    Congrats on an interesting debate myadsl (as oppose to the normal racial bashing)

    I think you nailed it reech "we seem to have developed world labour law, developing world labour market" so the fix is on both sides of the equation; i.e. loosening labour laws and increasing labour education/training

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