Programme director;
The CEO of Productivity SA, Mr Bongani Coka;
The leadership and representatives of all of our social partners;
Esteemed guests;
Ladies and gentlemen
This evening marks the third occasion since the beginning of the political term where our province is hosting Productivity Awards.
Following an invitation from the then Acting‐CEO, who is now the official CEO, Mr Bongani Coka, we felt that it would be in the province’s best interests to partner with Productivity South Africa in hosting the provincial leg of these awards for we were, and are still, convinced that through this association the economy of our province can reach higher levels of competitiveness.
Programme director, following the 2008 global economic downturn, a new normal in conducting business was introduced. For example, post the global economic downturn, we have noted that the shareholder has become even more vigilant and meticulous in ensuring that those entrusted with running entities, whether they be private companies or government departments, account fully to the shareholder in terms of utilisation of resources and performance of particular concerns.
The remuneration, for example, of senior executives has come under public scrutiny and there are more voices questioning the packages that executives get in relation, in particular, to the general workers of the same companies. Increasingly good governance practices have become the norm for most companies as opposed to tools that are used to fight corruption and fraud.
Further, investors have become highly risk‐averse in terms of their exposure and where they make their investments. Also, governments or their proxies have become more vigorously‐involved in terrains which, historically, had been viewed as the preserve of the private sector. A perfect example is the bailout which was mounted by the United States government for their banks. No one would have thought that the bastion of capitalism which has always preached the independence of markets would intervene in the manner that it did, but such are the times that we find ourselves in.
Programme director, while we get used to the new normal, life has to go on. We have to trade. We have to produce goods and services. We have to be competitive. In our case, we also have to align all of our efforts with the campaign to end poverty, inequality and unemployment. In other words, no one has called time out in terms of trade. Whether, we are the first world or developing country, we have to be productive and globally‐competitive in order to survive and grow our economy.
It is because of our appreciation of this new normal that we welcome the message that emanates from Productivity SA – a message that says we constantly have to improve our ways of producing, improve our efficiencies so that we can remain globally‐competitive. Pointedly, we understand that, in this globalised world, we compete not only with economies that are at our level of development but also with so‐called developed economies.
That is why when we were requested to present a few words, we felt it would be proper for us to remind all our social partners present here this evening what our understanding is of productivity. We accept the most basic definition which states that: “Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input”.
However, what we think is important for this evening’s session is what benefits high productivity brings to a national economy. The Wikipedia Encyclopaedia states that:
“The benefits of high productivity are manifold. At the national level, productivity growth raises living standards because more real income improves people's ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social and environmental programs. Productivity growth is important to the firm because more real income means that the firm can meet its (perhaps growing) obligations to customers, suppliers, workers, shareholders, and governments (taxes and regulation), and still remain competitive or even improve its competitiveness in the market place”.
What this means is that productivity is not a nice‐to‐have but a prerequisite for accelerated socioeconomic transformation. In our case, it would mean rapid and accelerated job creation and less burden on state resources in terms of providing a social net for those who are poor.
Programme director, one cannot discuss productivity without mentioning efficiency. According to a U.S scholar: “efficiency is a relationship between ends and means. When we call a situation inefficient, we are claiming that we could achieve the desired ends with less means, or that the means employed could produce more of the ends desired”. Further, the scholar describes states that “economic efficiency is measured not by the relationship between the physical quantities of ends and means, but by the relationship between the value of the ends and the value of the means”.
In simplistic terms, every concern can gauge its productivity by comparing the value of the means invested in an endeavour, against the value of the ends gained from the endeavour. This principle, we believe, applies not only to concerns but to economies as well. For an economy to be competitive, it must adhere to the principle of economic efficiency.
This brings us then to what we understand by competitiveness. We have already said that the environment in which our economy has to interact with other economies is highly‐competitive. With belt‐tightening being the hallmark of the new normal, it is those economies who satisfy all of the twelve pillars of global competitiveness, as stipulated by the World Economic Forum’s Global Competitiveness Index(CGI), who stand a better chance of sustainable economic growth. Interestingly, in measuring the level of competitiveness, the CGI stipulates three stages for economies i.e. factor driven economies; efficiency driven economies and innovation driven economies.
The assumption is that, for example, factor driven economies would be emerging or developing economies which rely mainly on their natural endowments whereas innovation economies would be economies that have reached the highest stage of competitiveness and have to rely on technological advancements for maintaining their global competitiveness and, hence, their sustained growth. The question then is: “What has all of this got to do with these Productivity Awards?”
All of this context tries to paint a vivid picture that the decisions that we take at a plant level or in boardrooms do not only impact on that particular organisation but on the economy of the whole country. This context aims to galvanise all of us, involved in the production process whether we are in the public or private sector, to be adhere to the principles of productivity in order for our businesses to grow.
Productivity is at the core of promoting entrepreneurship in our country. In order to address the challenges we face, we need entrepreneurs who are able to innovate and come up with new inventions. Perhaps because of our past, we have observed how those who want to enter the world of business do not enter as producers of goods and services but as intermediaries. While this is understandable, we would want encourage innovation and creativity.
Also, this evening we want to dispel the myth that productivity is the sole preserve of the private sector. Productivity SA needs to work together with the public sector in order to improve efficiencies within this sector and ensure that this foundation of our democratic state is able to function optimally and service other social partners.
It is for this reason that, in the coming years’ awards, we would like to see government departments competing and, hopefully, winning awards. The challenges that we face demand a public sector that is able to innovate and thinks outside the box.
We have already witnessed that such desired levels are attainable even within the public sector, if one takes into account the examples of South African Revenue Services and the Department of Home Affairs. This is a culture we need to inculcate within the public sector at large.
As all of us know, Programme Director, recently the National Minister of the Planning Commission Minister Trevor Manuel presented the final National Development Plan to the joint sitting of parliament.
The main objective of the plan is to make South Africa a better place to live in by 2030. The plan has many pillars including reversing the tide of unemployment, empowering our people with skills and improving the standard of education.
In a nutshell the plan seeks to:
- Increase employment from 13 million in 2010 to 24 million in 2030.
- Raise per capita income from R50 000 in 2010 to R120 000 by 2030.
- Increase the share of national income of the bottom 40 percent from 6 percent to 10 percent.
- Establish a competitive base of infrastructure, human resources and regulatory frameworks.
- Ensure that skilled, technical, professional and managerial posts better reflect the country's racial, gender and disability makeup.
- Broaden ownership of assets to historically disadvantaged groups.
- Increase the quality of education so that all children have at least two years of preschool education and all children in grade three can read and write.
One of the other critical planks around which South Africa’s economic prosperity can be built is economic growth. However, as all of us know, economic growth can only take place in, among others, conditions where there is a concerted effort from all the working force of that country to up the game and raise the bar in terms of productivity. In our view, entrenching the culture of productivity is, therefore, one of the crucial cornerstones around which to build a prosperous country which will be able to hold its own and compete with other nations in the ever shifting sands of globalisation.
Programme director, we commend Productivity SA for driving a process which would, in the long‐term, ensure that our economy is competitive. To all the nominees and the eventual winners, we want to say that you have only this evening to bask in the glory of your success. Tomorrow brings with it, its own challenges and, therefore, you cannot afford to rest on your laurels but you need to build on the foundation you have laid and ensure that you outstrip the competition.
Our government, through a variety of instruments, stands ready to assist or partner with you in the journey to build an economy that creates opportunities for all, an economy that is globally‐competitive, an economy that creates jobs; obliterates inequality and pushes back the frontiers of poverty.
I thank you
