South Africa’s economy is doing well. But, the same can’t be said of its labour market, says the Freemarket Foundation’s Loane Sharpe.

Speaking at a transport conference, in May, Sharpe said that current labour productivity in South Africa is, in fact, negative. “For every worker you add, production decreases and for every worker you remove, productivity increases,” he stated.

Next gen

While the average age of a union member in South Africa today is 43, the average age of a job seeker is 27. “It’s a whole new generation. Young people are interested in job mobility. Older people are concerned with job security. Those are two totally different things. Job security means you want to extend your tenure in a job that is ultimately economically vulnerable. Job mobility means you want to acquire skills and experiences with Blue Chip organisations that can help build a long-term career.”

New school

Continuing, he said young people in the workforce today want individualised bargaining, while the old workforce wants collective bargaining. “You’re going to have to make this shift in your businesses. You’re going to have to come up with clever employment contracts, many of which will be temporary of one kind or another. Staff will be heavily rewarded for productivity, and the workforce will be mostly young. You have got to prepare yourself for those changes if you want to survive in this catastrophic labour market.”

Data mining 

Sharpe says that, with data being so widely available, analytical qualifications are becoming increasingly valuable. “You can gain advantage through better analytics of your customers, your suppliers, your workforce, and even your competitors. My advice is to get some kind of analytical qualification. You could, over a five-year period, double your earnings after inflation.”

He added that companies should be targeting the black middle class. “Nearly 80% of the 5.9 million black middle-class are in the private sector. The middle-class is defined by its values. Mobility is a value. Bourgeois progress is a value. Saving for retirement, being independent from the state, good quality education for your children, ownership of your own home, and access to finance for a car; these are the characteristics of the middle-class.”

Technology

Sharpe also had some advice on how to use technology to your benefit. “Use technology to monitor, measure, record, and remunerate,” he says. “You can drive tremendous amounts of labour cost out of your environment – and reduce waste.”

On the subject of employee contracts he said: “Start innovating in your employment contracts. Start finding better ways to get young people into your workforce. Hire people that are capable, and interested in reward and recognition for their performance. You need to make these changes in your workforces, otherwise you’ll become obsolete.”

Thankfully, at least according to Sharpe, the services sectors – finance, retail, transport, logistics, and telecommunications – are growing rapidly and will not stop. He says companies need to embrace Affirmative Action. “You must do, as a business, what is right for you in the circumstances – set your own target, and then work towards that.”

He concluded by saying companies should welcome black economic empowerment. “But with that comes different products, different transport routes, and different channels to market.”