Statistical agency Productivity South Africa (SA) on Tuesday released the 2018/19 productivity statistics report, with Productivity SA chairperson Professor Mthunzi Mdwaba noting renewed political support and funding to fulfil the agency's mandate to support growth, employment and productivity to enable socioeconomic development and competitiveness.
To address the challenges facing the country, and more broadly the continent, in terms of employment, productivity and economic development, more responsive government and effective collaboration among labour, government, the private sector and civil society was required to inform the key interventions to avoid unnecessary blockages and improve economic opportunities. This is the role of statistical agencies, including Productivity SA, he explained.
"We were approached by Employment and Labour Minister Thulas Nxesi to play a role at the jobs summit that took place in October 2018 and in enabling the Department of Employment and Labour (DEL) in achieving the objectives of the summit. After four years of lobbying, the support we received was unprecedented and there are funding arrangements in place for the final quarter of the 2019/20 financial year, as well as a long-term funding arrangement that enable us to fulfil our mandate of reporting on productivity to inform effective policies."
A new board had been appointed and Mdwaba said the emphasis of the agency's work was on providing the information to make governance and regulation more responsive to the economy and able to respond to stakeholder needs, to inform consultations about economic decisions, and enable adequate planning by government agencies and organisations to avoid bottlenecks hampering productivity.
Providing statistics about productivity in South Africa is critical to measure the levels of efficiency in South Africa's industries. This enables an evaluation of the attractiveness of South Africa to foreign and local investment, which is focused on efficiencies and productivity, said Productivity SA CEO Mothunye Mothiba.
"Our role is to provide the country with these statistics because of the direct correlation between productivity and the economic potential of our industries and the sustainability of employment and wages, as well as our attractiveness to investment," he said.
The statistics also help enterprises to track changes in business performance, production costs and the efficiency of production inputs, while it also helps labour to negotiate wages.
"The statistics give policy makers a reference to identify and start thinking about areas of weakness that need to be focused on, challenges in manufacturing, in the primary sectors and in labour productivity and how to shore them up. Understanding the challenges in the economy enables policy makers to more accurately determine what the implications of policies are for the economy," said Mothiba.
The 2019 statistics highlighted that South Africa's gross domestic product contracted in 2018 after a mild rise in 2017. The contribution of primary sector industries – agriculture, forestry and fishing, and mining and quarrying – shrank to 10.7% in 2018 from 11% in 2017; the contribution by secondary sector industries – manufacturing, electricity, gas, water and construction – remained constant at 19.6%; and the tertiary sector industries – wholesale, retail, accommodation, transport, storage, finance, real estate and business services – grew to 22.4% in 2018 from 22.2% in 2017.
"While these indicators are consistent with a maturing economy, there are worrying signs of growing employment but stagnant output, which represents a reduction in productivity owing to an increase of labour input without a correlated growth in output," explained Productivity SA chief economist Dr Leroi Raputsoane, who presented the 2019 report.
Real output growth fell to 0.6% from 1.7% in 2017, while labour input grew by 1.5% up from 1.3% in 2017 and capital input growth contracted from 1% in 2017 to 0.7% in 2018. This resulted in labour productivity growth falling from 0.4% to -0.9%, multifactor productivity growth (a measure of combined labour, capital and technological inputs) falling from 1.7% to -0.4%, but capital productivity growth increased to 1.3% from 0.7%.
The continued deceleration in economic growth in recent years was owing to several constraints in the economy, including policy uncertainty and long-standing domestic economic developments that reduced consumer and business confidence, he said.
Responding to a question from University of Pretoria Enterprises CEO Dr Deon Herbst, Raputsoane noted that the agency was considering statistical forecasting, but currently remained focused on providing good statistical analyses to serve as a baseline for policy evaluation and formulation.
However, Mdwaba responded by noting that the agency was aiming to reposition itself to meet the new expectations of providing effective support to government, business and labour and to more effectively serve its economic and social mandate to promote employment growth and productivity and contribute to the competitiveness of the economy.
"The DEL is working closely with Productivity SA and we are working closely with appropriate international organisations, such as the International Labour Organisation (ILO), to provide resources and training for our labour, government and civil partners."
Mdwaba sits on the enterprise committee of the ILO and the agency uses Organisation for Economic Cooperation and Development methodologies for its work and analyses.
Additionally, in partnership with the Council for Conciliation, Mediation and Arbitration and Business Unity South Africa, the agency provides a free small and medium-sized enterprise business support Web tool that helps small businesses to manage labour issues. It provides guides for labour relations and compliance requirements, as well as contract templates and information sheets to help to reduce the administrative and economic burden of labour relations on small businesses.
Productivity SA is working on an additional productivity evaluation module that will be added to the tool during the first quarter of 2020.
"We will not achieve economic transformation and job creation, as well as a productive, globally competitive high-income economy, if government does not collaborate with the private sector, the labour movement and civil society. We look forward to taking our place as a labour market instrument that is vested in promoting employment growth and productivity," concluded Mdwaba.