Solving the unemployment conundrum – a word from RMI’s CEO

The new Administrative- and Main Agreements for the Motor Industry Bargaining Council (MIBCO) were finally published after three years of negotiation. They came  into operation on 01 March- and 29 March 2021 respectively. These agreements both have a financial impact and  present an administrative burden on employers.   

While we all welcome the stability and peace of mind the finalisation of this agreement brings it does not however take away the huge challenge industry faces with regards to the cost of doing business in South Africa.

In July 2020 we spoke about how excessive red tape and unrealistic compliance costs in an over regulated business environment were stifling sustainability and growth in many business sectors, particularly in the retail automotive sector. That position has not changed. I read with interest an article in City Press this month by Xolile Mpini, the Chief Executive of the Langeberg Unemployed Forum, where he echoed our view saying that labour laws and the national minimum wage are not benefitting the unemployed. In fact they are doing just the opposite. When government increases costs of the employers they are effectively destroying jobs. 

And yet, the Employment and Labour Minister, Thulas Nxesi has recently spoken about balance and the need to ensure that we do not violate the Constitution in terms of the Bill of Rights and the right of everybody to work.  I question if government fully realises that by instituting a National Minimum Wage Act, they are effectively permanently closing the doors of employment in the face of the unemployed.

One only has to consider the very high unemployment statistics in SA, (still growing daily in the automotive retail industry) to appreciate on the one hand the desperate need for employable persons to find work under these extreme circumstances and on the other, the challenges employers are facing.  One can argue that people cannot work for a lower wage, but I would wager that if given the choice, most of the unemployed would in all probability be willing to work at a more competitive wage than be earning zero.

This could ease the financial burden on financially distressed employers and contribute to the creation of value, security and jobs.

If jobs are to be retained, we have to find a way to reduce the cost for the employer and this goes much broader than just the wage debate only. Government’s plan to introduce projects which provide employment is commendable, but what is the point of creating on one hand when you are simply losing on the other?

With so much pressure on the commercial sector right now to remain financially viable and to preserve jobs, it is time attention started to be focused on the regulatory factors which employers continue to struggle with.  This is the only way we will be able to rebuild the economy and make a dent in the unacceptably high rate of unemployment.