Part 2(b): Actions
21 INTRODUCTION
Our Developing country faces many economic issues which hinder growth; the national development plan intends to ‘remove constraints on investment, job creation, energy generation and distribution, urban planning and many more’. Some of the actions which are stated in the national development plan (NDP) under the economy and employment structure are ‘to simplify dismissal procedures for non- performance or misconduct with reference to minor firms, Reduce the cost of living for poor households and costs of doing business through microeconomic reforms. Develop proposals for an acceptable minimum standard of living and proposals on how to achieve this over time. Remove the most pressing constraints on growth, investment and job creation, including energy generation and distribution, urban planning, Position South Africa to attract offshore business services, and build on the advantage provided by its telecommunications, banking and retail firms operating in other countries to name few.
This section will critically assess these actions within the NDP; consider the merit behind each, the possible achievement, potential refinements or alterations of these actions to better them in the long-run which may improve results.
22 ACTION 1: REDUCE THE COST OF LIVING FOR POOR HOUSEHOLDS AND COSTS OF DOING BUSINESS THROUGH MICRO ECONOMIC REFORMS
22.1 REDUCE COST OF LIVING AND THE COST OF DOING BUSINESS
The national development plan aims to get all the households to participate in the economy, they’re going to achieve this by reducing the cost of food, commuters transport and housing, and also improving the quality of free education and health care.
The government had set a mark of creating 3 million housing and housing opportunities, by 2013 this mark was passed, the majority of people who benefited where from the poorest group.
Free education to learners also increased from 2002 to 2012, from 0.8% to 56.8% respectively, as the number of learners not paying fees for their tuition, the number of newly qualified teachers also increased, and it is expected to exceed 14000 new teacher graduates by 2015 (Gov.za, 2012)
22.2 COST OF DOING BUSINESS
The cost of doing business can be defined as how easy or difficult to someone to start a business within a specific country, complying with the relevant rules and regulations.
S.A is currently ranked 43, which is 71.8%, comparing to the previous year’s S.A has made it easier to do business, however, there are certain constraints that are still hindering the difficulty of doing business, such as obtaining credit (World bank group).
Figure 21: How S.A and comparator economics rank on the ease of doing business
Source: (World bank group)
South Africa only requires 6 procedures for one to start a business, it take approximately 46 days for the whole procedures’ to finish, at a cost of 0.3% of income per capita.
These actions are attainable mostly reducing the cost of doing business, however, the cost of living for poor household will be difficult to attain it.
23 ACTION 2
24 ACTION 3
Gross domestic product (GDP) is the measurement mostly observed to estimate strength and growth of an economy (Mohr P. , 2014). Action 3 of the NDP will be analysed further, GDP measures four facets of an economy; consumer spending, investment, government spending and the total amount of exports and net imports. Of the four facets, investment is the most unpredictable and even unstable but still the most reliable and preeminent indicator of the route in which an economy is setting out. (Duff, 2014) Figure 20, is a simple graphical illustration of how investment influences growth.
Figure 20: How investment influences growth
It is clear that if companies do not invest in their inventories and transfer money to foreign markets it would hinder the GDP growth of our economy.
Similarly, a lack of job creation would lead to unemployment and therefore a reduction in the overall GDP growth of a country’s economy. By removing this constraint one would avoid the decrease in growth. The NDP intends on increasing job creation by having better education results, a healthier population better located and maintained infrastructure a sound social safety net and much lower corruption levels. Job creation and GDP growth focus on efforts relating to a better economy and growth trajectory which is one of government’s key programmes in the NDP. This action of the NDP seems to be slightly ambitious as the current state of the economy is not where it was four years ago but the pace at which it is moving and improving will not allow it to achieve these objectives with the actions that have been set out. An improvement of this objective is including a system in which there are periodic goals with certain time period in which these goals need to be established.
25 ACTION 4: ECONOMY AND EMPLOYMENT
POSITION SOUTH AFRICA TO ATTRACT OFFSHORE BUSINESS SERVICES, AND BUILD ON THE ADVANTAGE PROVIDED BY ITS TELECOMMUNICATIONS, BANKING AND RETAIL FIRMS OPERATING IN
OTHER COUNTRIES
Figure 22: S.A Exports
Source: (TradingEconomics, 2015)
According to the NDP, the government intends raising exports while carefully monitoring the currency, appreciation of the rand should not make South African products so expensive that other countries cannot, or become reluctant to trade. On the other hand, depreciation allows our trade partners to buy more of the Rand with their currencies, increasing the amount of exports.
With the increase in usability of the internet, this action seems very attainable. The world-wide-web has created the platform for anything from individual social networks and grocery shopping on your laptop or tablet. Infrared, Bluetooth, 3G, fibre optic cables, etc. have paved the way for technology and especially the communication industry to flourish.
Websites that make websites, applications that pay bills and mobile phones and networks that connect the world in a matter of seconds, South Africa may quite easily realize this action. Possibilities are endless in this regard.
With trading relationships with the BRICS group of countries, the SADC countries, the EU and China to name a few, South Africa already have obtained stability with regards to a foundation, stepping stones throughout the world to help establish itself as an international powerhouse with regards to trade.
In order for companies to succeed, the people that are employed must constantly be well skilled and therefore well-learned to ensure that objectives, goals and vision are materialized. In the instance of a nation as big as South Africa, a recurring problem seems to be the level of literacy in the country. Without income how are they to pay for decent level education, how are they to acquire and polish skills? The most obvious answer is by working, finding employment. How though, does one find a job when employers are trying to find the best qualified and highest academic achievers to employ in their business?
Establishing online businesses and cultivating long distance business relationships is no longer difficult. Managing and overseeing foreign investments has become much easier as well. There are becoming less and less reasons as to why businesses cannot expand, and why local products and services cannot survive in foreign countries. Globalisation is spreading people around, room for growth is abundant.
Increases in the level of opportunities for self-improvement are paramount to sustained economic growth. When people are equipped and trained, they will be able to operate and keep up in the ever-moving, ever- changing employment environment, where investment spending has improved infrastructure and therefore created jobs.
Working with foreign countries to afford the people academic opportunity can not only increase the countries human resources but increases the collaboration at government level as well as plants the seed for future leaders in political, economic and market arenas to grow together, creating relationships and cultivating international fellowship.
An increase in the funding and assistance of youth owned business is one of the greatest investments that can be made in this generation. The ability of young people to grow and realize their dreams is astounding. Young South Africans today are able to encourage their passions on social media, gathering a following of hundreds of their peers locally and internationally.
With the rapid improvements in technology and telecommunications, business meetings can happen anytime at the same time in multiple locations, people conduct transactions that reflect almost instantly, and we are able to follow international trends and make safe purchases and sales to people half way across the world, easily and quickly. The world is getting much smaller, given the appropriate attention, South Africa can position its youth and it’s previously discouraged, right in the fore front, as leaders in globalization.
26 ACTION 5:
27 ACTION 6. PUBLIC HEALTH SYSTEM CANNOT MEET DEMAND OR SUSTAIN QUALITY
The plan outlines the critical action as to introduce the idea of national health insurance with an emphasis on improving public health facilities, availing more people trained to tackle health problems and cutting down the absolute cost of private health care (‘National Development Plan,’ 2012, p.24). With regards to the plan to have quality care for all, this is continuously affected by the lack of efficiency in the way that public hospitals are run. It is mentioned that there needs to be an improvement in management especially at institutional level (‘NDP,’ 2011, p.44).An example of inefficient managing would be doctors attending to their patients on time or other medical professionals getting to a workshop at the time specified. The keeping of time is quite important in the first regard as sometimes, it could make a difference between life and death, diagnosing a disease and choosing the right course of treatment.
Steps being taken forward are in the right direction, that is, a preliminary exploration in lean management at hospitals. Norman Faull (founder of the Lean Institute) has been called into change the efficiency of management at the worst performing hospitals in Gauteng. His task is improve the overall flow, reduce waste and total waiting times to achieve the goal of better service delivery in South Africa (‘Fixing the South African public health sector,’ 2015). He has begun to do this by for example, by refining the layout, he managed to reduce the time it took to get patient files by 56%. Further implementation of his methods brought about a 45% reduction in waiting times and up to 50% increase in service at pharmacies (‘Fixing the South African public health sector,’ 2015).The implementation and use of the lean management methods in other hospitals could as such make a significant difference but in order to do this, Faull further mentioned that they must become part of the daily routine not used once every few weeks. This is vital if any change is to be seen in the overall management of the public health system
In order to avail more people to work as health professionals, it is vital that the source of this lack is addressed. The lack of more health professionals is due to the high cost of training. It is further aggravated because South African doctors are going to other countries that can offer better working conditions and a better chance of their livelihood being received (Matthis, 2015). Seeing as South Africa spends 8% of its GDP on health care (above the recommended 5%), the private sector should be urged to offer bursaries to students studying towards the healthcare profession and they should be given incentives to use their training here after they finish. Doing this would mean making the money that is part of this 8% available and could be done through collaboration with the government as well (Matthis, 2015) If done right, the incentives of a better, more reliable pay and better working environment can slowly bring the number of health care professionals up and help achieve the action of meeting demand and sustaining quality.
28 ACTION 7:
29 ACTION 8:
30 ACTION 9. SOUTH AFRICA REMAINS A DIVIDED SOCIETY
According to the National Development Plan (2012, p.28), despite the changes made since the end of apartheid in 1994, South Africa still remains a divided society. Because of the large variances in the ethnicities of South Africa’s people, there still exists persistent stereotyping of different races as well as overt and undercover discrimination. Although actions have been taken to gradually reduce racialization, they haven’t made a lasting enough impact on the issue at hand. Reversing the social and economic effects of apartheid is not a short term achievement and this is affected by several factors that the government cannot control (‘National Development Plan,’ 2012, p.28). The use of programmes such as black economic empowerment (BEE), affirmative action and land reform can be used to reduce the divide but they work better in tandem with a growing economy and a better education system (‘National Development Plan,’ 2012, p.28). In 2011, a survey by the Reconciliation Barometer found that 32% of South Africans believe the biggest inequality is economic. This was followed by 22% who thought the divide is due to political parties (Lefko-Everett, 2011). Programmes such as BEE and affirmative have been deemed to come to the benefit of white people. This is because the white males who used to be protected are no longer first in line to get jobs, so they open their own businesses or turn to more technical trades. In addition, the blacks are the ones they use to work in these new ventures because it is beneficial for them to hire black people (for ratings) in order to get contracts from the government (Kane-Berman, 2009). The way this affects the social divide is that only one section of people is encouraged to grow their entrepreneurial spirit and it is not the blacks, majority of whom have been diverted into public service for the government. By 2007, the Institute showed that there had been a spike in white owned small businesses. In addition, due to BEE and affirmative action, blacks are more disadvantaged because they are constantly being poached and thus cannot stay in one place long enough to build up experience at their learned trade (Kane-Berman, 2009). This leaves them at a bigger loss in the job market because employers are more inclined to take on someone who stayed at one place and became an expert. Another reason these programmes aren’t markedly improving the divide is because the government’s stance on education does not aim to improve the entrepreneurial spirit and has discouraged foreign direct investment. There is a bigger focus in white owned companies getting more blacks than teaching people to start building their own businesses from the ground up. This only serves to create a small group of wealthy blacks who cannot create their own businesses and further empower the poorer members of their own race group (Kane-Berman, 2009). In addition, lower foreign direct investment means slower economic growth and as a result less jobs. A marked change in the education system would reduce the sense of claim to dependency on the State (through social grants) and encourage lower income people to use entrepreneurship as their driving force rather than the constant belief that the government will provide. The presence of factors such as good roads, good infrastructure, technological development and a large youth population ready to be trained make South Africa ripe for an economic change led by entrepreneurs. More entrepreneurship related skills such as self-reflection, focus (to mention but a few), should be encouraged as part of the curriculum from a young age in collaboration with knowing about the history and how the situation can be better improved by those in it taking up arms against false protections like social grants and jobs reserved because of affirmative action and BEE.
31 ACTION 10:
32 ACTION 11:
33 ACTION 12: SIMPLIFIES DISMISSAL PROCEDURES FOR NON-PERFORMANCE OR MISCONDUCT, ESPECIALLY FOR SMALLER FIRMS
The second action of the national development plan is ‘to simplify dismissal procedures for non- performance or misconduct with reference to minor firms’. The NDP discusses at some length the simplification of the procedure i.e. they have implemented a probation period of six months to establish whether or not a certain individual meets the requirements of a certain job. During this probation period unfair dismissal therefore does not apply to individuals who are employed on probation. This is to reduce unfair dismissal due to non- performance or misconduct as a result of their being unfamiliar to that certain industry.
In terms of the Labour Relations Act of 1956, the NDP intends on reducing the regulatory burden by recommending that the pre-dismissal procedure requirements within the act be revisited and altered accordingly so as to reduce reversal of appeal cases and thus reducing unfair dismissal. With reference to this action it is evident that the NDP has sufficiently explained and there is clear intention and direction in which to accomplish simplification of procedures.
The development of our country lies in the pages of the national development plan the two actions which have been discussed show clear a ‘onward and upward’ direction of the economy and hopefully be accomplished by 2030.
34 ACTION 13:
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