Improving productivity can lift economic growth and reduce joblessness

The sector, which accounts for around 13 percent of GDP, is an important source of employment and productivity growth and of demand for the service sector. Image: EPA, NIC BOTHMA.

The sector, which accounts for around 13 percent of GDP, is an important source of employment and productivity growth and of demand for the service sector. Image: EPA, NIC BOTHMA.

Published Sep 19, 2022

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THE low productivity growth (labour productivity and total factor productivity) particularly for the SMMEs, is hampering efforts to improve economic growth and the competitiveness of South Africa, according to Productivity SA board chairperson Professor Mthunzi Mdwaba.

Speaking at the entity’s Annual General Meeting on Friday, he said it was an undisputed fact that productivity improvement was the most effective to ensure long-term competitiveness, long-term business success, economic growth and, should be addressed holistically if the country was to tackle the challenges of unemployment, poverty, inequality, and exclusion.

Low competitiveness was cited as a fact, with SA’s global competitiveness ranking at a low 62nd place out of 64 countries last year, and 60th out of 63 countries this year. Infrastructure (including education and innovation systems) and business efficiency (including productivity and efficiency and management practices) ranked the lowest at 60 and 56 respectively.

Mdwaba also said there has been a decline in the contribution of the manufacturing sector to GDP growth over the last two decades.

The sector, which accounts for around 13 percent of GDP, is an important source of employment and productivity growth and of demand for the service sector.

He said this sector must be a national priority if South Africa was to begin pushing back the tide of joblessness that threatens the country’s social stability.

Productivity SA chief executive Mothunye Mothiba said it was not all doom and gloom, and government programmes were making inroads in ameliorating youth unemployment. “Productivity SA, in collaboration with the DTIC, which provided funding, have implemented the Itukise Internship Programme, targeting mostly industrial engineering graduates.”

According to Mothiba, 1 200 interns were placed in the companies participating in Productivity SA Competitiveness Improvement Services (CIS) Programmes, including the Workplace Challenge Programme.

“Approximately, R15 799 859 was paid in stipends to the interns. Over 100 interns who graduated from the Itukise Internship Programme were placed in permanent employment. Furthermore, through this involvement., Productivity SA has supported the creation of an enabling ecosystem for SMMEs, start-ups and co-operatives in the formal and informal economy through its Business Turnaround and Recovery (BT&R) and CIS programmatic initiatives” he said.

All resolutions submitted to the vote were adopted by the shareholders and the AGM approved the financial statements for the fiscal year 2021/22.

This public entity falls under the Department of Employment and Labour, with a mandate to promote employment growth and productivity, thereby contributing to South Africa’s socio-economic development and competitiveness.

“The department has made a commitment to the board at its meeting dated 4 May, 2022 that, as part of its reconfiguration and repositioning… it will transfer some existing employment related functions and responsibilities performed by the Public Employment Services Programme and the Unemployment Insurance Fund to Productivity South Africa.”

Mdwaba said this would confer on Productivity SA a big responsibility, which they believed would require support henceforth.

edward.west@inl.co.za

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