Clem Sunter

The changing nature of work

2013-05-10 10:21

Clem Sunter

Foxes scan the environment all the time for red and green flags. A filthy great red flag went up earlier this week with the announcement that we lost 100 000 jobs in the first quarter of this year. Our official unemployment rate is just over 25% but on broader criteria could be as high as 40%. Wow! America frets over an unemployment rate north of 7% and is printing dollars to reduce it. In April, the result was an extra 165 000 jobs which reduced the rate to 7.5% that is still unacceptably high by American standards.

We, by contrast, are light years away from that rate and are heading in the wrong direction. So rather than being retrospective and looking for whom and what to blame, let's look at how we can start to resolve the problem in the future bearing in mind that America's record unemployment rate was also 25% when it hit that figure in 1932 during the Great Depression.

Recognising the game has changed

Before foxes decide on the best plan of action, they study the game to see how it has changed - in this case the employment game. Judging from the cover of The Economist last week which had the words "Generation jobless" to indicate the issue of youth unemployment around the world, the change has been radical. The two main sources of employment since the Second World War - the civil service and big business - have now dried up. Governments are having to battle declining tax revenue, budget deficits and an enormous excess of debt and established business is trying to cope with economic hard times worldwide. The only way to grow your business is to take someone else's market share which means having a lower cost base, higher productivity and a greater spirit of innovation. The arrival of management consultants in head office signals only one thing: retrenchments on a large scale, those left unscathed working like exhausted hamsters, technology replacing people and the CEO taking credit for growing profits against all odds at the next annual general meeting.

Meanwhile, the education system in virtually every country bar Germany is still churning out kids for the job market of the last century: achieve a good mark in your final exam, get a good degree at university, brandish your results to your choice of employers in the public and private sector and you are bound to get a job. Yet, as The Economist indicates, the word "job" is rapidly becoming like the word "dinosaur" for aspiring young job seekers. The classic definition covers a dying breed and the latter have never been trained for any alternative. They grow bewildered, then angry and then in some cases like the Arab Spring revolutionary.

Before getting on to what we have to do to set the ship on the correct course, three further points have to be made:

- public works programmes do not create permanent jobs. They can teach people new skills but as the new stadiums for the 2010 Soccer World Cup showed, when the work is over it's over. Spending R3 trillion to upgrade our infrastructure is a good start but it does not resolve the problem on a long term basis;

- the logical conclusion of examining the changes in the employment game is that the only real job creator around is small business and ushering in a new generation of entrepreneurs. To create 11 million jobs by 2030 and bring our unemployment rate down to 6% will require the establishment and nurturing of at least another 2 million businesses. That should be our prime target because nothing else can provide a permanent solution; and

- we have to accept we are no longer a frontier economy like all other African economies. They can grow at a rate of 7 to 8% per annum because they have open spaces like the Serengeti for entrepreneurs to do their thing. We, by contrast, ceased to be a frontier economy in the dying moments of the 19th Century when first the diamond mines and then the gold mines and then all the service providers to the mines like the banks and the breweries were consolidated into large enterprises. Now we have a crowded economy with little space for entrepreneurs to grow. I will never forget when I was being shown around the Central Party School outside Beijing, which is the leadership academy for the Chinese Communist Party, noticing that in many lecture rooms Chairman Mao's quotations had been replaced by Deng his successor. When I asked a professor for the reason, he said that Deng had taught the party to retreat from the economy and allow enough space for local and foreign entrepreneurs to thrive. That was the basis for the Chinese economic miracle.

Winning the game

Given the changing nature of work, what must we do? In previous articles, I have mentioned many of the steps we should take so I will confine myself to the most important ones:

- We must change our vision from creating new jobs to creating new enterprises with a target of 2 million by 2030. We have 15.5 million citizens on welfare and we should do everything to turn at least 10 to 20% of them into entrepreneurs. They in turn will hire some of the remainder - seven jobs each and you will reach the 11 million NDP job target ahead of time. As Steve Biko said: "Handouts do not improve your self-esteem: doing it for yourself does."

- We should have an Economic Codesa as soon as possible where government and the captains of industry produce a blueprint that gives entrepreneurs not only the space they require but also the support in terms of finance, tax incentives, freedom to hire and fire, exemptions from onerous and unnecessary regulations, being part of the supply chain of big business and being paid promptly for the services they provide using the latest smart technologies; and

- We need to review our education system to produce young people for the job market of today and not yesterday. Every school should have an entrepreneurial programme to teach pupils how to turn their passions into commercial ideas, how to team up with kindred spirits, how to market themselves and how to make money.

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