South Africa's 'rigid' tax, labour laws obstacle to SMEs

South Africa’s ‘rigid’ tax, labour laws obstacle to SMEs

JOHANNESBURG, SOUTH AFRICA. South Africa’s tax and labour laws are preventing the country from fostering entrepreneurial talent, thus resulting to opportunities to create new jobs being significantly limited, Daily Buzz director Andrew Brown said this week.

While South Africans have a natural tendency towards running their own businesses, the government needs to do far more to help nurture SMEs, Brown said.

“There are too many rules and regulations currently restricting the growth of new businesses, which either makes it more difficult to start a business or constrains entrepreneurs who have managed to do so.”

Brown has described South African labour laws as ‘far too rigid’. “The labour laws do not favour a meritocracy, where those who add more value are recognised. Instead, the laws have created an administratively intensive process, which costs time and money when dealing with problem employees,” he said.

“As a result, the law tends to entrench those who are employed and does not favour the creation of new jobs,” he lamented.

“For a services-based business in particular, such as a retailer or food operator, where staffing costs result in high initial overheads, it is important to provide appropriate incentives, as these businesses have the potential to add real value to the local economy through the creation of new jobs.”

The skills levy that is paid also often returns little value, he noted. “It would be preferable to scrap the Services Education Training Authorities (SETAs) and instead institute some form of training tax rebates back to those SMEs that actually demonstrate a financial commitment towards training their employees.

(editing by Issa Sikiti da Silva). Photo by Frontier Market Network.


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