As the Year Draws to a Close!

Monday, December 10th, 2012

The end of another year that has literally flown by!

I know that older folks always used to say that time flies as you get older, but I don’t know – I hear younger folk saying the same things these days.  Clearly, we still have the same time available, but I think it’s how we crowd that time out that makes the difference.  We feel we don’t have time for anything, but it’s amazing how we find time to sit in front of the TV, or browse the internet, or fill our lives with one form of leisure or sport activity after the other.

WHAT HAS BEEN HAPPENING?

This past year has not been an easy one.  I don’t know anyone who has sat back, smiled and said anything to the contrary, especially in the small business environment.

In the latter half of 2012, we have witnessed increasing labour unrest, especially in the mining and agricultural sectors of the economy.  This is something that had become a regular, annual thing, but it seems somehow to have got more militant, more strident, more demanding than before.  This is evidence of a groundswell of discontent in the ranks of the general workers and the unemployed.   More and more workers are protesting against what they sometimes refer to as “apartheid slavery” (Tony Ehrenreich), and looking to better wages and working conditions.

COSATU and its affiliates have not helped by encouraging workers to make demands that are totally unrealistic, and it makes one wonder whether these worker-representative bodies have lost touch with reality, or whether they’re just desperate to hang to their own reason for existence!  It used to be the case – and I believe still is in terms of labour legislation – that strike action was the very last resort; once all attempts at negotiation have failed.  In recent years, the converse has been the case, with workers downing tools almost simultaneously with their demands.  They probably knew their demands were extreme and would be unacceptable.  What has also been alarming is the intimidation and violence, and the general disregard for public property – totally at odds with our law and our constitution.   I guess the rule here is that we can be free as we like as long as we do it their way!

This has resulted, apart from the appalling loss of life at Marikana, in the downgrading of our credit worthiness in the eyes of a number of international credit rating agencies, and obviously, signs of investor reluctance to risk too much in our country.  Business confidence is down, especially in the manufacturing sector, which as we all know is a major employer of people in the country.   The issues surrounding all this are many: political manipulation, vested interests, unrealistic labour legislation; as well as genuine poverty and hardship for a large majority of our people.

Business, like it has done many times over the years whenever it has been faced with challenges, is asking the question: “is there another way we can do business?”  Mechanisation seems to be the answer to the labour problem.  Replace people with machines wherever possible.  And, this has happened all over the world, for many years, especially within the larger business sector who have the financial means to invest the capital required for this change.  This has swelled the ranks of the unemployed.  Yet, alarming as this may sound, history has shown that this has not necessarily been a bad thing.  Paul Zane Pilzer, in his thought-provoking book “God wants us to be Rich” says this:

“Most of the unemployment we are experiencing today is the result of new technology – a machine replaces a worker, or better methodology enables one person to perform a job that used to require two.  As technology advances, individual jobs are eliminated; but the gross national product remains unchanged – society still receives the products or services from the eliminated jobs, which are now performed by a machine or by fewer workers using a better method.  When the displaced worker finds a new job, the output of that job adds to the gross national product, and society experiences an increase in real wealth.

Unemployment resulting from this type of displacement always creates new wealth for society, although sadly not always for the same displaced worker.  The wages of the displaced worker are transferred to the owners of the machine that replaced him, to his employer, and to the remaining workers who utilise the better method.  These immediate beneficiaries of the displacement then use their increased remuneration to purchase new products and services, often products and services that were created just in response to their increased ability to afford them. 

From an economic standpoint, this is how our society has progressed since the beginning of civilisation.  The only thing new about this process today is the speed with which it occurring, as changes that used to take place over millennia or centuries now take place in decades or even a few years.  This increased speed underlies most of our employment problems today, as individuals must deal with changes over a single lifetime rather than over several generations.

This process entails one great risk, both for individuals temporarily displaced by technology and for society at large.  That risk is our potential failure to understand that unemployment caused by technological displacement is the opportunity for personal and economic growth, rather than the beginning of permanent economic decline.  Individuals who fail to realise this are doomed to economic failure, and societies that make this mistake are in danger of total collapse.”

The concern for me is that none of the stakeholders seem to be looking outside of their own little goldfish bowls for the solution.

Government and the trade unions continue to make promises of employment and service delivery that they simply cannot meet.  To try and make up for this, government keeps employing people in jobs they don’t need, and paying them salaries that are more than the private sector ever would.  The trade unions seem to think that business has a never-ending supply of money which it is withholding from their workers, and government – especially those at the top who are busy clambering over each other at the trough – are wasting it before it is even earned.  Workers have the mistaken belief that there is such a thing as a good job, a secure job, and that once they‘ve got it, they will continue to get increases way above the consumer price index, year after year.  This viewpoint is unrealistic and unsustainable, and something will have to give – and soon!

WHAT IS MISSING?

The nature of work has been changing for a few decades now, but in recent years has changed quite dramatically.  The biggest employers of people are not big business.  It is the small to medium sized business, especially in the manufacturing sector, which has the greatest opportunity to employ people, – but they are going to need some help in the years ahead:

  • They are going to need labour legislation that is more business-friendly;
  • They are going to need incentives from government to stimulate local manufacture and export, simultaneously making it more difficult for importers of cheap products from the Far East who generally employs labour practices far worse than our own.

This is not difficult to do, but will require a great deal of political will – and the support of the trade unions.  I have a sense that the ever-growing Chinese ‘colonisation’ is as a result of vested interests, making it that much more difficult.

The general worker, and with this large group of people I include all those who are currently unemployed, will need to be re-trained, and taught – if possible – to think innovatively.  Just because I’ve lost my job, doesn’t mean that I can’t work doing something else.  Unemployed farm workers, who currently swell the townships surrounding many rural towns in the countryside, feel that they cannot work because there is no work.  While it may be true that the farms no longer provide the work they used to, it doesn’t mean that workers can’t do something else. Especially if they’re willing!  Farmers must accept that if they cannot pay their workers a living wage, then they need to either get out of the business, or find a way to do business differently.

If the government can do anything, it should be investing huge sums of money into entrepreneurial training and development, and adult education; not traditional education but something which re-trains people in ways to add value to the economy and to themselves.

THANKS

I would to thank all our clients, both old and new, for their continued support this past year.  It hasn’t been the easiest of years with some you embarking on some major expansion/diversification plans, and not knowing how the market was going to treat you.  Still, at the end of the day, hard work never goes to waste and I’ve no doubt that you will see the fruit of it soon.

I also want to thank my staff and the Business Buddies team for their incredible commitment and hard work this past year.  Finserv continues to grow and provide a value-added service that I believe, in many ways, is quite unique in our industry.  It’s really all thanks to you.

I would also like to wish all of you, your families and teams everything of the best for the holiday season, and I trust especially that the Christmas and New Year period will be peaceful and restful.