SA ups global competitiveness

Johannesburg - South Africa has seen its economic competitiveness rise for the second year running, but labour issues are still perceived as an obstacle.

According to a survey from the World Competitiveness Yearbook, published by the Swiss-based Institute of Management Development (IMD), South Africa has increased its ranking to 44th this year, following its 2009 and 2008 rankings of 53rd and 48th respectively.

The survey highlights that South Africa, like other emerging markets, benefited from inflows of foreign capital.

“South Africa's strong competitiveness is being linked to the increased level of portfolio investment assets and direct investment stocks moving inward, as investors divert to emerging markets that were not too exposed to the financial crisis in a bid to protect their assets," said executive manager of Productivity SA Sello Mosai.

Rock bottom in joblessness

Areas where South Africa scored particularly badly were unemployment (58th out of 58 countries surveyed), unemployment of youth under 25 (55th), equal opportunity legislation (57th), personal security and protection of private property (54th) and the availability of skilled labour (58th).

However, a look at the countries selected for the report shows that South Africa is the only African country represented. Notable exclusions from the survey would include high growth international regions such as Iran, Nigeria, Vietnam, Egypt and Pakistan, all of which have been tipped by investment analysts as high growth regions.

Business accelerator Aurik’s Pavlo Phitidis said the concentration of many major industries in the hands of a couple of dominant players contributes to South Africa's lack of competitiveness.

He points to an international report on South Africa, which showed that just 11% of the economic supply chain was in the hands of small- to medium-sized enterprises.

"These large organisations have through self-regulation created layers and layers of red tape for new entrants, which in turn raises the cost for entrepreneurs," Phitidis said.

For example, a number of the small firms he mentors and supports have run foul of regulations which fail to promote their development or growth, or improve their competitiveness.

Phitidis added that for him, the South African labour market went hand in hand with the education system and cut to the core of a major problem facing the country.

On the plus side, South Africa scored highly in the areas of cost-of-living index (1st place), effective personal income tax rate (2nd), stock market capitalisation as a percentage of gross domestic product (2nd) and electricity costs for industrial clients (1st).