Date: Sun, 29 Oct 1995 16:08:10 +0200

South African Competitiveness in the World Economy

by David Lipschitz, lipdav@iafrica.com, Organization: Orbital Decisions.

Three months ago I returned to South Africa having spent eight years living abroad, one year in Sydney, Australia and seven years in London, England. I returned to my place of birth as:

I missed my family
I missed the mountain, the sea and the stars
I wanted to be part of the new South Africa.

I was warned about the violence but decided to return lock, stock and barrel in any case.

Now I would like to share some of my experiences with you. This series of articles will focus on South Africa's competitiveness on the world stage. I will write it the way I see it based on fact, but in reality opinion. Hopefully you will gain an insight into the way a South African feels about what is going on here and therefore be able to draw your own conclusions as to the way of life here and the problems and opportunities that South Africa presents as we make our way into the 21st Century.

For these articles I would like to concentrate on labour and assume that capital is in plentiful supply and that there is freedom of movement of goods, services and capital. I know that this is not entirely true as it is difficult to take money out of South Africa due to exchange controls, however there are many South African companies investing overseas and the numbers continue to grow.

Ten years ago when I left South Africa I thought that the quality of goods in Australia and England was lousy. Now returning to South Africa I find that the quality here is extremely bad. I put this down simply to lack of respect for one's job and one's product.

Living in London meant that getting information was not a problem. Any subject could be researched. One could rely on one's suppliers to provide information on their products and to know what they were talking about. Unfortunately this is not so. Most of the time it is extremely difficult to get information and the buyer has to check the information himself. This provides for great opportunities for overseas companies to invest here and to take advantage of the local skills shortage. However this leads us to a second problem.

Starting a company or a factory in South Africa is difficult because although labour is cheap and in plentiful supply, productivity is extremely low and therefore taking waste into account, operating costs are very high.

The unions demand uniform pay increases (actual values, not percentages) and don't allow management to directly deal with staffing problems. This means that after a while everyone in the factory or business earns the same amount. Increasing staffing levels is easy. Firing or disciplining a member of staff is difficult. Therefore management's key staffing controls of pay, discipline and incentive schemes are removed from management's control.

In summary, I have opened a number of cans of worms, all related to labour, eg: violence, quality, sourcing knowledge, investment in South Africa, unemployment, productivity, waste, unions, pay and incentive schemes.

I will explore these issues in greater detail in the forthcoming series of articles and will try an show how we are dealing with these problems.

David Lipschitz BSc (Hons) MBA

Orbital Decisions Management and I.T. Consultancy.

email lipdav@iafrica.com