Fin24

Labour laws, BEE hamper small firms

2011-11-22 22:00

Johannesburg - Inflexible labour legislation and black economic empowerment are frustrating small business growth, according to an index released on Tuesday.

"Major regulatory barriers identified by the index are inflexible labour laws, broad-based black economic empowerment (BBBEE) and Sars (SA Revenue Service) inefficiencies," said Chris Darroll, CEO of SBP, the research company which compiled the index.

However, this could be seen as positive as these barriers were influenced by government policy, which could be reformed.

"South Africa is squandering a critical economic asset and source of job creation by failing to create an environment for the small and medium enterprise (SME) sector to flourish," Darroll said.

"But the good news is that this can be remedied."

The 2011 SME Growth Index is the first annual study produced by SBP.

It surveyed 500 SMEs and would initially track their performance for the next three years.

The firms chosen survived the first two years of operation, had between 10 and 50 employees, and operated in sectors that the government had prioritised for growth - manufacturing, business services and tourism.

Respondents said inflexible labour legislation constrained their growth.

"SMEs also express anxiety about increased inflexibility if proposed amendments to labour legislation materialise."

Less than half the firms on the panel had grown their staff numbers over the past five years, while less than a third had created new positions in 2011.

"South Africa's SMEs are simply not growing at the pace needed for large-scale wealth and job creation."

Darroll said the economic climate was given as the main reason for the lack of job creation.

Respondents were also unhappy about BBBEE requirements.

"Widespread dissatisfaction among all the firms, including black-owned businesses, is very evident, despite some 57% having accreditation," said Darroll.

"Accreditation comes with annual costs, is administratively burdensome, and is not balanced by enhanced access to procurement opportunities."

Half of respondents planned to grow in the short term.

"SMEs in the business services sector in particular are confident of growth, but manufacturers and tourism firms are less so.

"Just over half of business services firms envisage expanding staff numbers, as do 35% of manufacturers and a fifth of tourism firms," he said.

Darroll said older firms tended to employ more people.

"This is in contrast to government's emphasis on supporting startups."

Small businesses contribute more than half of South Africa's gross domestic product and make up 77% of non-government jobs, he said.

Comments
  • Nasdaq7 - 2011-11-22 22:26

    Always the same problem: small businesses cannot cope with the workload and cannot afford to hire new staff.

      Pietpetoors - 2011-11-23 07:08

      Never mind "cannot afford to hire", we don't want staff. If we can do without them it is better. Because of the labour laws and minimum wages you stay as far away from employing people as possible. You work with as little staff as possible and have as much possible automated. Machines do not strike, machines do not have a stinking attitude (the world owe them everything), machines do not demand minimum wages and if a machine do not work you can either change it or fire it and get a replacement without having to spend thousands on legal fees to do so.

      Nuck Choris - 2011-11-23 10:29

      Yes Pietpetoors exactly. But this has been known for years. If you were government (a sane one that is ) you would be asking yourself why is there this resistance to employ and grow. Instead of easing restrictions our idiots want to impose more. Who in their right mind would want to employ people in this country. Most are ungrateful lazy, and with the trouble causing unions it just becomes a no brainer. We have just sold our manufacturing concern to a larger organisation. My one partner said never again would he employ staff in this country.

      Nuck Choris - 2011-11-23 11:41

      @100001537126598 I have now sold two sucessful businesses. One in 2005 after 17 years and now another which has been operating since 2005. Would I start another that has to rely on employees. I seriously doubt it. Another point to make is that in a small operation, organisations like the metal industries actually stifle growth. We had to waste money being forced by law to belong. It cost us 13th cheques, extra pensions, crazy increases, no matter how productive staff were, plus the monthly fees. It is just crazy. My belief is 13th cheques, bonuses and increases should all be performance driven, then you would see your, hard working productive staff fly and the rest....well get rid of them.

  • Tim - 2011-11-22 23:20

    this is not rocket science ..... but will Government take heed? I guess not, they seem to have lost their marbles completely now.

      lizards - 2011-11-23 08:07

      They ahve not lost their marbles - they have just given them all to the SACP and COSATU. Both those organisations should get out of the ANC and then maybe,maybe we will see some progress.Let the SACP go it alone to see how little support they have amongst the voters of this country.

  • eastcoaststi - 2011-11-23 06:08

    The only way to survive is become a micro business and apply the 'mexican fisherman' philosophy to your life style, that way removing yourself from the stresses of legislation.

  • Pietpetoors - 2011-11-23 07:05

    Wow they eventually realized it. We've been complaining about for years. You can add unions and minimum wages to the reasons for SOuth Africa's high unemployment rate

  • McFreak - 2011-11-23 09:19

    You cannot survive without good people and opportunities to sell your goods or services. You cannot employ the people who can and WANT to work for yu because of the colour of their skin. So you have to employe people whose attitude is one of entitlement. If they are not trying their damnedest to be unproductive then they are occupying their time with scheming how to clean you out. You cannot sell what you have unless you have a considerable war chest with which to fund the excesses that BEE imposes on one - gifts, entertainment, bribes etc etc. So if you are talented, entrepreneurial, honest and dignified the last place you would want to ply your trade is in South Africa

  • Mallyg - 2011-11-23 09:56

    The ANC force Black Empowerment down our throats to protect themselves against a 7% minority group. Surely they can’t feel so worthless, useless and incompetent as to be incapable of creating their own businesses. Rather, they force BEE’s against our will, into our boardrooms.

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