SA’s private sector gets back 450% more production from its employees than the taxpayer gets from the public servants, researchers say.
A third quarter Labour Market Navigator survey, released yesterday by research firm Prophet Analytics, showed that the country’s public sector continues to disappoint.
An analyst and director at the firm, Peter Aling, suggested that one way to address labour productivity was to shrink the public sector and privatise state-owned companies.
"The most productive allocation of resources occurs within the private sector," Mr Aling said.
He characterised productivity as making the best use of available resources, and profitability as an organising principle of business that led to maximum productivity.
The views come a few weeks after resolutions at the African national Congress’s policy included the call for greater state intervention in the economy, particularly in mining.
Mike Schussler, chief economist at economists.co.za, said privatisation could not work in all cases.
"If it is something that should be making money and you often have to pour money into it, then it makes sense to privatise.
"For entities like Eskom, you can’t privatise. What you could do is allow private entities to also provide electricity to break up the monopoly," Mr Schussler said.
A recent study by employment services firm Adcorp said SA’s labour productivity had fallen to 40-year lows.
"I think, in many cases, our labour productivity is a bit above average, but in relative terms I think we’ve slipped. We have not improved as much as other countries have, and we have probably slipped more in state sectors in terms of productivity," Mr Aling said.
He suggested the reason for such a difference in productivity levels between the public and private sectors was accountability and profit.
"It’s an incentives-based argument. The private sector is profit driven. The same is not true for the public sector. The private sector has to ensure a certain level of profitability and productivity.
"Tax revenues are not determined by the productivity of the public sector. The concern is that money being collected in tax and lost to corruption could be better employed in private-sector enterprises."
It was "not difficult" to find reasons for poor labour productivity in SA, Mr Aling said. He referred to labour market regulations, ill-educated labour, a poor work ethic, bureaucracy, crime, poor infrastructure and lack of access to capital.
He also noted that while the labour productivity in the private sector was better, it was not without difficulties. Out of 151 JSE-listed companies included in the survey, only 65 had labour productivity that exceeded employee costs.
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