Presidency asks big business not to retrench workers

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RYK VAN NIEKERK: South Africa’s continuing electricity supply, logistics, crime and corruption problems have put significant financial pressure on many businesses and many have retrenched – or are planning to retrench – employees. This is especially prevalent in the mining and manufacturing sectors, and several big companies such as Sibanye-Stillwater, ArcelorMittal, Glencore, Impala Platinum and Gold Fields have announced plans to retrench thousands of workers.

However, the presidency has urged big business not to do so as there are plans to address the core structural problems in the country, and positive outcomes are on the horizon.

Rudi Dicks is on the line. He’s head of the project management office in the presidency. Rudi, thank you so much for your time tonight. Can you put this call on the private sector to hold off on retrenchments into perspective?

RUDI DICKS: Thanks, Ryk. Thanks for inviting me. Yes, of course. Just a small bit of context. Of course this is part of the ongoing partnership that we have, and I think it’s important to understand that it’s part of the partnership that the president has built with senior CEOs, the 146 CEOs, and part of our business engagements.

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In your intro you talked about the three areas that we are collaborating on, and those are around the implementation of the Energy Action Plan, the implementation of the specific interventions to deal with the freight logistics crisis, and of course crime and corruption.

These three issues have a significant impact on businesses, and particularly with the mining sector, for instance, who aren’t able to get their products to port – or on rail for instance. These have been some of the concerns that they have raised with us.

I think what we have done collectively and in partnership with the private sector is to develop specific interventions – through the Energy Action Plan, through the establishment of the National Logistics Crisis Committee, and through the adoption of the freight logistics roadmap – to be able to deal with the most immediate concerns which are reducing the congestion at the ports, and making sure that we are able to have a more efficient rail system; introducing competition, for example. And then of course the long-term stuff.

All we say is give [us] an opportunity for us to be able to implement this with greater speed and urgency in partnership with business before we take decisions to retrench workers; retrenchment of workers should be a last resort.

For us, it’s going to be important to ensure that we do implement these plans as we partner with business going forward.

RYK VAN NIEKERK: Now of course South Africa has record high unemployment levels, and there’s a big social impact when workers are retrenched. But many businesses may argue that we’ve heard promises before that the core problems will be addressed – and that hasn’t [been done]. There have been significant delays in the implementation of structural reforms. Do you think there’s a buy-in from the private sector that these challenges will be able to be addressed within a few months?

RUDI DICKS: Absolutely, Ryk. I think there’s a bit of a difference here. In fact a substantial difference. When we launched the Operation Vulindlela Structural Reform Programme, we looked at five areas – electricity supply, logistics sector, visa regime, water for example, and telecommunications. And we’ve done quite a significant amount of progress in all of those. There’s a quarterly report that we produce. We produced the third and fourth quarter [report] towards the end [of the year], and it’s on the president’s website.

But I think the difference for me is that in both logistics and energy, we’ve been able to develop a close collaborative effort in the implementation of the plan.

And particular businesses offered a whole set of capacity and support for us to be able to get traction on this.

For me, that’s the difference. It’s not government sitting in the corner implementing these plans on its own. It’s government working across the system, working within government, also collaborating and partnering with business and organised labour.

I think that’s really the difference where everyone is line of sight, everyone agrees on what the objectives are and we all work towards that. I think for me fundamentally it’s the reason why business has entered into this partnership with government, and in particular the partnership that has been driven by the president himself. And there’s a lot of faith in us being able to implement this as speedily as possible.

So I do think there’s a difference from what we said last time – [that] we sit and implement it ourselves. In this instance we are partnering with business to be able to implement and to support where interventions are required.

RYK VAN NIEKERK: Do you think it’s unfair – and by ‘you’, I mean the government – for companies to contemplate retrenchments within the social realm we are living in, where there are many social problems in retrenching workers, because businesses are actually quite predictable. If the economy is growing and everything is functioning well, they will invest and employ more people. But conversely, when things are tough and there are challenges affecting their profits they tend to cut costs, and of course the retrenchment of workers would be on top of the list. Do you think the announcements you have seen are fair?

RUDI DICKS: Look, business operates in a business environment, and where there are either market forces – for example, declining demand or price mechanisms that are not matching – or, in this instance, where there are logistical challenges, where for example business and mines in particular aren’t able to get the products to the port and then of course to the marketplace, there are challenges for them to be able to do that. And they would have to take measures to be able to reduce that cost. Arguably they would say from a business point of view they would have to find a way.

All we are just saying is that if there’s an ability from us to implement structural reforms that could ease the cost for business, and the efficiency gains that we can make ASAP through the freight-logistics roadmap, for example, or the work that we are doing with business through the National Logistics Crisis Committee, then retrenchment should be a last resort.

I think this is really the call that we are making – that we shouldn’t try and reduce cost and cut labour as quickly as possible; allow for this plan to be implemented as a matter of speed and for us to be able to give effect to that.

But business has to take business decisions. I think it’s really just a call to be able to ensure that we implement what we agree to as a matter of urgency.

And this is really why I think it’s going to be quite an important point.

From a socioeconomic context, of course we have high unemployment. We’ve seen some significant recovery post-Covid, and we’re close to recovering all the jobs lost pre-Covid. I think that’s quite important. So despite the challenges that exist we do see some recovery in the labour market. What we want to see is not the reverse of that.

So we have to work with business, we have to get the economy growing. If there are constraints to the economy, like for example the structural reform programmes not being implemented adequately and fast enough, then of course business would have challenges. But we are working fairly hard on ensuring that we address those constraints as a matter of urgency.

RYK VAN NIEKERK: The minister in the presidency, Khumbudzo Ntshavheni, said late last year that the private sector is engineering the collapse of the government.

It was said in the context of the investigation into foreign-exchange trading, which of course we have spoken about regularly on this show. These remarks don’t go down well with the private sector.

How would you describe the relationship between the government and the private sector, and do you think it has improved since last year?

RUDI DICKS: I think it has, and it’s precisely what I was referring to earlier on – that the president has taken the initiative with business to set up a partnership of focuses on three key areas: electricity and addressing the electricity supply constraints, resolving the freight logistics challenges that exist in the country, and addressing crime and corruption.

That partnership on practical interventions is something that I think [has been] long required, and of course there are going to be challenges. There are not necessarily always going to be agreements on some of the aspects that need to be implemented.

What this partnership does do, is it sets a frame for where we’re able to engage robustly with business but continue to have a partnership of implementing where you have a common line of sight of problems that we want [to end].

We all want load shedding to end, we all want efficiency in logistics and for products to get to port or for products that are being imported to get to customers in South Africa. We all want to reduce crime and corruption.

There’s a common interest here among different partners, and I think that’s the common agenda that one can develop.

But, as I say, there are always going to be disagreements on some of these aspects. For me, at the end of the day, being actively involved in implementing and supporting this with business colleagues, I think there’s a renewed partnership. There’s working together, there’s collaboration, and all of us have a role to play towards a common objective.

RYK VAN NIEKERK: We’ll have to leave it there. Thank you, Rudi. That was Rudi Dicks. He is the head of the project management office in the presidency.