SA’s labour unrest takes its toll

2012-10-20 00:00

THE notably buoyant and upbeat sentiments of many KZN business owners across most major provincial nodes have largely been eroded as a result of recent labour unrest.

According to the latest Business Confidence Index (BCI) released by Pietermaritzburg economist Clive Coetzee, BCIs across Pietermaritzburg, Port Shepstone and Richards Bay rose in 2012.

However, the overall 2012 KZN BCI declined from 73 to 69 points on the back of a decline in the Durban BCI, from 75 to 69 points. The BCI is judged out of a score of 100.


The Pietermaritzburg BCI rose from 63 in 2011 to 68 points in 2012, while the Port Shepstone BCI rose from 61 to 67 points. The BCI for Richards Bay also rose, from 74 to 79 points.

“If you compare our BCIs to the South African indicators on business confidence, KZN was much more optimistic about the future. Nationally, these are typically JSE-listed big firms with strong ties to the global economy, which is going through challenges,” said Coetzee.

But threats are looming

Coetzee told Weekend Witness that events like the Marikana tragedy and labour unrest in general would continue to dampen the current business mood in South Africa, as well as KZN. “Durban came off a very high base and it remains at a very healthy level. The year 2011 was a good year and this could be the reason for the recent drop.”

The CEO of the Durban Chamber of Commerce and Industry (DCCI), Andrew Layman told Weekend Witness that although local businesses were concerned over general labour issues and service levels at the port, the “business mood” remained relatively positive and stable.

Employment woes

While many respondents to the survey indicated a willingness to expand their operations, businesses were increasingly likely to avoid employing more people, as labour has generally been seen as a greater risk. “Businesses clearly plan to invest, but they are very hesitant to employ people. Restrictive labour legislation and general risks associated with employing people play a role. Businesses have to minimise their risks — it’s a fundamental business principle,” said Coetzee.

Production problems

It is clear that businesses operating in the services sector are much more optimistic about their prospects, while the production sector appears to be losing steam. The production BCI declined marginally from 72 to 70 points. In contrast, the services BCI rose from 74 to 85 points.

Uncertain outlook

The current level of disposable income in the KZN economy will help businesses to keep afloat.

However, Coetzee said KZN citizens, especially the poor, will suffer as a result of a lack of robust growth.

“The KZN economy is running at its own speed, but there is no major stimulus in the economy at present.”

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