Creating job creators - Politicsweb

11 October 2018 - The Jobs Summit agreement offered nothing to the people who are trying to set up small construction companies, coffee shops, kota stands and fashion studios. Nothing else will matter if ordinary people are not put front and centre of business creation.

Sara Gon 

The Jobs Summit discussed many things, but job creation was not one of them. That is because jobs can’t be created – businesses have to be created, which will then create jobs. And there was little apparent discussion of how best to create or grow businesses.

We all agree that unemployment is our most pressing issue (after unity in the ANC!). We don’t need to get the parties to a summit to agree on how to do it. We all know, as does President Ramaphosa, what is needed for this economy to grow.

To create jobs, the country needs more than anything an environment where the state does less in order for more to happen. This has been talked about ad nauseum.

Ramaphosa is not a pragmatist. His public speeches are clichéd and refer constantly to issues of race, the poverty of ‘our people’ and land. He never acknowledges that the African National Congress (ANC) is almost entirely responsible for these ills as well as the dire state of our economy.

Twenty-two practical actions were agreed to by the Nedlac parties at the Summit through a ‘Framework Agreement’.

The agreement includes commitments to support local procurement of goods and services to boost employment and job retention. This is an idea we thought had long died a deserved death.

As Ivo Vegter says: ‘Saint Cyril’s campaign to “buy local” in the hope of creating jobs is just like imposing trade sanctions on the country. It’s insane and self-defeating. The idea of making a closed economy self-sufficient is called autarky.’ Vegter refers to autarky being most recently practised by Nazi Germany and North Korea. (Even the meagre promises of the Jobs Summit are empty, Daily Maverick, 8 October).

He points out that buy local campaigns ‘actually impose costs on an economy, raise consumer prices, reduce choice and quality, and only benefit special interests’.

Other agreed matters concerned various existing and future schemes to nurture entrepreneurs. This all exists in a reality which fails to recognise that entrepreneurs are an extremely scarce breed. Very few people have the gift of entrepreneurship.

Certainly, we need to do everything to nurture entrepreneurs, but you can’t make people entrepreneurial who are not entrepreneurial just because we haven’t provided them with proper education and training.

Most young people need to be employed by other people. Some with sufficient experience, usually about ten years, may be able to start businesses of their own. Growing in employment is less about knowledge when first employed and more about getting experience.

The references to the waste economy, putting money into black enterprises, a network for job seekers (when there are no jobs to seek), and references to early childhood development, say nothing about business development.

‘Worker equity and representation on company boards’ says nothing about business development.

Reporting by businesses on executive pay ratios in annual reports is an emotionally and politically manipulative idea, and is none of the government’s business. It also says nothing about business development.

The extension of the Employment Tax Incentive is a risible attempt by the government to offer business an incentive – it’s barely an incentive and no new incentives are offered to encourage business development.

Other items that have nothing to do with business development are measures to address customs fraud and illegal imports, and ‘community-based and owned approaches to fast track rural water access’.

The agreement to establish a Presidential Climate Change Co-ordinating Commission will provide jobs, but only in the already bloated public service.

How does commitment to support the anti-corruption strategy and implementing a zero-tolerance approach to corruption create new business? Dealing with corruption doesn’t just mean establishing anti-corruption commissions.

The agreement offered nothing to the people who are trying to set up small construction companies, coffee shops, kota stands and fashion studios. Nothing else will matter if ordinary people are not put front and centre of business creation.

Trade unions do not create jobs; they protect the employed and fight for job retention. Yet most of the big federations are part of the Nedlac team.

By and large, they have been very reactive to the inevitable deterioration in sectors of the economy and very belligerent in doing so. They should be standing shoulder to shoulder with business to push for as many businesses to be created. More jobs mean more members and more members mean more dues.

The union movement’s contribution, however, is to the preservation of existing jobs only. That’s absolutely fine, but let’s not pretend that they help to develop businesses.

Ramaphosa and his cabinet know full well that the only way to improve the economy is by opening up competition, let the private sector lead the way and remove a myriad of administrative stumbling blocks to doing business.

The government’s job should be focused on creating the infrastructure

necessary for companies to do business. But it can’t achieve this just by increasingly taxing the few companies there are, along with increasingly pressed individuals. The government needs more taxpayers and this can only be done by developing businesses.

To make a difference to the economy, the ANC can’t continue to run complex national, municipal and provincial institutions with people whose criterion for appointment is fealty to the ruling party. Cadre deployment is the original state capture.

Sara Gon is a Policy Fellow at the Institute of Race Relations (IRR), a think tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823 (SMSes cost R1, Ts and Cs apply).