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Public sector productivity 'abysmal'

Aug 20 2012 13:33 I-Net Bridge

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Johannesburg - SA’s labour productivity is “abysmal”‚ with the performance of the country’s public sector especially poor‚ Prophet Analytics’ quarterly Labour Market Navigator‚ released on Monday‚ shows.

The research found private sector labour productivity to be 450% ahead of that in the public sector.

The survey also found that although private sector labour productivity was massively higher than that of the public sector‚ the sector was not without challenges.

Only 65 JSE-listed companies achieved labour productivity that exceeded employee costs.

The four highest ranked of the 65 - RMB Holdings‚ Vukile Property Fund‚ Investec Bank and Assore - generated more than R100 000 of annual operating cash flow per worker after accounting for the contribution of capital in the production process.

“These findings support other data which show that labour productivity for the South African economy as a whole has fallen to a 40-year low and capital’s share of national income has correspondingly risen from 39.9% to 47.2%‚” said Peter Aling‚ the analyst responsible for compiling the research.

Aling characterised productivity‚ referred to as making the best use of available resources‚ as “a paramount economic goal”.

The analyst took a swipe at the South African Reserve Bank’s measure of labour productivity in terms of output per worker.

Aling said that by contrast‚ “capital productivity”‚ according to the Reserve Bank‚ had steadily fallen at an annual 1%. In inflation-adjusted terms‚ a unit of capital produced R7 297 worth of output in 1967 and R4 924 this year.

“They (figures) do not explain why firms continue to lay off workers in large numbers (1.9 million since the peak in the late 1980s); and they do not explain why labour’s share of national income has fallen from 60.1% in 1995 to 52.8% in 2011‚” he said.

The South African economy had produced more and more output using fewer and fewer workers‚ Aling argued.

“South African workers‚ on the whole‚ are destroying value‚ with the result that they are gradually being retrenched‚” he said.

Speaking on capitalism‚ the analyst said capitalism was usually taken to be consistent with light regulations for business and low overall taxation.

“Against both these dimensions SA ranks very poorly: 144th out of 183 countries in terms of business regulations‚ and 116th out of 178 countries in terms of taxation‚” he said.


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