Picture: ISTOCK
Picture: ISTOCK

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SA HAS an official unemployment rate of 25%, but the uncounted unemployment rate is closer to 33%. This means more than 6-million people who are looking for work cannot find any.

Contrary to what many people may think, improving performance does not lead to fewer jobs. The more productive people become (the more efficiently and effectively they increase production), the more they can produce for themselves (rather than import), and the more they can export, the more sustainable and profitable their companies and government will become.

This growth will require more employees, more suppliers, more imports of inputs, and more jobs. More productive employees will also get more remuneration and a satisfying and fairly managed reward for their hard work.

The government in turn will be able to provide, with fewer people, the quality of service that businesses need to perform. Employing more people in the government to reduce the unemployment rate is not a sustainable solution.

Anim van Wyk of Africa Check calculated that the government employed 2.16-million people out of the 15.8-million people employed in SA. This means almost 14% of all employees work for the government.

"Employment creation by public sector agencies is not a permanent solution to the vast unemployment problem. In the longer term, such a policy is bound to result in huge fiscal strains," says Econometrix chief economist Azar Jammine.

And yet unions demand incessantly that wages must increase faster than inflation, and they refuse to include individual performance to differentiate increases or bonuses. The new legislation on equal pay for work of equal value does not outlaw differentiation, it requires only a justification of the differences and a consistent application of rules.

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NOT including performance as a means of differentiating remuneration favours the poor performers. The high performers suffer and are eventually forced to seek greener pastures.

These are the employees who make a difference in a company, and yet they are made to earn the same as employees who do not care about the company or do their jobs well.

What message is being sent to employees who would like to make a difference and go the extra mile? They are being told that if they can, they should move to where their performance is recognised, or stay where they are and stop working so hard. Join the rest of the employees who are disengaged. Don’t worry, there’s still a salary every month and, of course, the customary 13th cheque, which is meant to be a performance-related bonus, but has become just another pay cheque for everyone.

Ayn Rand, in her book, Atlas Shrugged, argues that the heroes in society are those who think and act on facts, and not the villains who defy reason, evade facts and act on what is left — their emotions.

As a result, the villains are in constant conflict with reality and achieve nothing. When this thinking becomes dominant, the will of the heroes is eroded.

One could argue that the emotions of politics and labour are dominant in society. This explains why SA’s productivity is decreasing every year, goods and services are too expensive to export and often, more expensive than the imports.

The result over a longer period is a decline in the exchange rate, which will continue on its downward spiral — it is not helped by sudden changes to finance ministers. The only way the rand can improve in the long term is through improvements in productivity.

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OTHER than a labour law review, reducing red tape and improving certainty, how do we get SA to perform?

Many experts say money doesn’t motivate. My experience and substantial research shows that for most employees it does — if it is used properly.

SA needs correctly and quickly to link pay to performance to improve overall productivity. This does not only apply to unions. It applies to all sectors: the government, state-owned enterprises, private and listed companies, and nongovernmental organisations.

It applies to all levels of employees, from the cleaner to the CEO. Remuneration and, in particular, incentives need to be linked properly to performance.

Performance must be properly defined, especially at executive level, to consider the context in which the organisation operates.

Unemployment is the biggest risk to business in SA. Growing businesses, improving the top and bottom line and creating jobs — if not in the company, then outside it by using more service providers and other external services and products or resources — should be seen as real performance that deserves bonuses at executive level.

However, linking pay to performance is not the one silver bullet to solve all the country’s problems. Appropriate education and skills development are critical, and have a direct effect on performance. Remuneration will not replace this essential input, but rather encourage further training and development from employees, as that will be a way for them to progress in the company.

The unemployed are the biggest risk to stability in SA that will affect all, including business and the government. SA needs to tackle this issue urgently.

Education and training are essential, but their effect is longer term. Linking performance to remuneration is a much quicker and more effective change to implement that can complement education and training and assist in tackling unemployment.

• Grubb is MD of Khokhela