A total of 7.29 million working hours were lost in South Africa in 2012 as a result of strikes, recent reports said, badly affecting the growth of Small and Medium Enterprises (SMEs) in a country still battling with one of the highest unemployment rates in the world.
This recent bout of strikes, many of which were ‘illegal’ and ‘unprotected’, have led to the drop in confidence levels among SMEs owners, according to the Business Partners Limited SME Index (BPLSI)’s first quarter 2013.
Besides the labour unrest, the BPLSI also shows that the drop in confidence levels are influenced by the effort and cost to comply with South Africa’s very modern labour legislation, which is often out of reach for most SME owners.
“This legislation often inhibits SMEs from employing more people and, wherever possible, results in them mechanising instead,” Nazeem Martin, Business Partners Limited MD said this week.
“In relation to this, SMEs also expressed low confidence levels of 30% that government is doing enough to foster SME development in South Africa.”
The BPLSI also highlighted the fact that SMEs have declining confidence levels with regards to finding staff that possess the correct skills set to facilitate business growth.
SMEs expressed confidence levels of 49% that they will find staff with the right skills suited to their business. This is a decrease of 5% in comparison to the last quarter, the index said.
Martin blamed the South African education system, at both secondary and tertiary levels, which business owners do not believe equips people with the necessary skills for the world of work – especially in a modern, technology-driven work environment.
“Mathematical and literacy skills, as well as general business acumen, are the areas in which secondary and tertiary institutions will have to do much work to prepare people for gainful employment in the modern day work environment.”
Asked how confident they are that their businesses will grow in the next 12 months, SMEs expressed confidence levels of 71%, which is line with confidence levels recorded last quarter.
Martin said it was a positive indication that SMEs continue to be confident, despite the negative sentiment that is widespread in many industries.
The index also reveals that business owners are slightly more confident that the economy will be conducive to business growth in the next 12 months.
“Confidence levels of 51% were recorded this quarter, an increase of 1% since last quarter. These increased levels may be related to the prediction that African economic growth is expected to accelerate this year and in 2014, despite the less rosy predictions for South Africa’s economy.”
(Source: Business Partners Limited, final editing by Issa Sikiti da Silva).
Photo by African Arguments.