Productivity in South Africa: A Review

Published on 31st October 2017

Those who know better have defined science fiction as any idea that occurs in the head and doesn't exist yet, but soon will, and will change everything for everybody, and nothing will ever be the same again. As soon as you have an idea that changes some small part of the world you are writing science fiction. It is always the art of the possible, never the impossible.

Productivity is often not far from this assertion, the only difference is that it is no longer in the head of somebody, or non-existent, it exists and it is there for anyone to embrace and reap the rewards it offers.  A lot has been written about productivity, what it is, what it means and how it could be harnessed.  I guess we are all the converted as we gather under this roof.  The trouble is that we often treat productivity as a pain-killer, we only harness it in times of distress and that’s when the trouble begins.

When South Africa was readmitted in the global village, we were reminded that in order to survive in the global stage, we needed to be competitive.  In order to be competitive, we were told that we need innovation which involves all manner of things. What all successful economies have in common, are high levels of productivity and innovation. The simple meaning of innovation in this context is changing the way we do things for the better.  Human beings are generally uncomfortable with change because it often comes with pain, all-be-it temporary in some cases.

The key question we need to ask in every step of our journey to enhanced productivity is “Are we doing this for the benefit of the country and its people, or just for the bottom line which often benefits a few?  As long as the end goal is to benefit a few, our efforts will not gain traction. I guess this is where the theme this evening is apt “working together to create jobs.”

I have observed that the notion of trickledown economics has long lost credibility.  In the mid-nineties, economists were arguing that countries must invest their energies in growing their economies, and the social and developmental dividends will follow.

When the South African economy recorded its fastest growth rates over the period 2004 to 2007, with real GDP growth averaging 5.2% per annum, it did not create additional jobs in real terms.  This earned the economy that infamous label called “jobless growth.” This also hardened the attitudes of workers who argued that the improved productivity was only about improving bottom lines with little to show for social dividends for workers and the society at large.  We need to address this perception whether it is real or unfounded.

Leading economists point out that we stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders, from the public and private sectors to academia and civil society.

They also point out that the First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

Recently in Davos, they highlighted three reasons why today’s transformations represent, not merely a prolongation of the Third Industrial Revolution, but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact.

The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.

Who would have thought that robots could become so advanced that they can perform all the house chores as it is the case in Japan? Who thought that cars could one day drive themselves? I am sure that if in the 1980’s one said cars could one day drive themselves, a lot of us would have laughed off the idea as science fiction. The speed and depth of digitisation, is overwhelming and present a real challenge in what we have become accustomed to.  Robotics, the Internet of Things, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing the Uber application right on our door step, is forcing a rethink of the way we do things.  It is precisely for that reason that in the International Labour Organisation and BRICS, we are discussing the future of work and how to prepare for these challenges as policy makers.

I submit that in order for Productivity South Africa to remain relevant, it will need to think seriously about positioning itself as a key player in both taking advantage of the opportunities that the fourth industrial revolution will bring about and equally, how we deal with the unintended consequences.

It is documented that when productivity growth in the United States rebounded sharply over the past decade, stronger productivity growth coincided with sharply declining manufacturing employment.  This led some analysts to suggest that the rise in U.S. productivity growth may have destroyed jobs, as companies need fewer workers to produce the same amount of output.  We need to confront the fact that for individual companies or industries, higher productivity growth may lead to a loss of jobs all-be-it in the short to medium term.

Let me raise just four points for the leadership of Productivity SA to ponder moving forward;

One, we need to strengthen the advocacy of harnessing productivity as the main ingredient of the way of doing things, not only in businesses, but also in our own lives. This will eliminate the pain-killer approach to productivity.

Two, we must find the delicate balance between promoting productivity and minimising any negative social impact that may come with it.

Three, Productivity SA must tool and retool for the imminent fourth industrial revolution challenges. This may require us to revisit our Productivity Accord entered into a couple of years ago.

Four, let’s play active role as Productivity SA to support the government in its efforts to revitalise township and rural economies.  Let’s play some role in graduating that Spaza Shop owner into General Dealer and that General Dealer into a supermarket owner by simply giving them the know-how.

Given the urgency and the challenges that lie ahead, lets adopt productivity as the modicum of doing things on a daily basis.  It must be like climbing Mount Everest; it takes a hard journey over a number of days and nights to reach the summit. We must not forget that in the past, productivity was often used as a stick. Every time when workers demanded wage increases, they were often told that their productivity was too low to justify any increases, or increases of the magnitude they were demanding. It was much later when some companies started introducing rewards for productivity improvements, all-be-it on individual basis.

We have amongst us a group of entrepreneurs who have taken upon themselves the responsibility to ensure that their enterprises are productive and competitive thus creating wealth for themselves and creating employment opportunities plus sustaining employment.  We honour and celebrate these companies because they made a choice and embraced a culture of productivity which acknowledges that productivity is the effective and efficient use of resources to achieve desired outcomes.

We encourage all and sundry to be the ambassadors of productivity and continue to instill a culture of productivity in their enterprises and within the communities they serve. I once more call upon Public, Private, Trade Unions and community organisations to tap into the wealth of expertise in Productivity South Africa.  We must not only remember that there is Productivity South Africa when we are already in distress.  “Prevention is better than cure,” so they say.  Let’s use the programmes in Productivity SA to prevent us from falling into distress in the first place.

An African proverb says and I quote, “If you want walk fast, walk alone, but if you want to walk far, walk as a group” I prefer the latter; let’s walk together as a group, so that we can cover bigger ground.

By Mildred Oliphant

Minister of Labour, Republic of South Africa.

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