What are the benefits to small businesses of government's labour reforms?

Stephen Grootes speaks to Dr Azar Jammine, Director and Chief economist at Econometrix , about the government’s major labour reform aimed at protecting smaller firms with limited HR capacity.

Listen to the interview in the audio player below. 

Minister of Employment and Labour, Nomakhosazana Meth has gazetted new regulations that seem to make it easier for smaller companies to remove workers who fail to meet their Key Performance Indicators (KPI's).

For years, business groups have made the point that it's not fair to have the same legal burden on big companies and on small companies.

The system is now supposed to make it easier to resolve disputes more quickly, and an employer will no longer have to warn a worker that they could be fired for not not performing.

In essence, the proposed reforms are aimed at protecting SMME's with limited HR capacity, by improving dispute resolutions between the employer and employee.

In other words, an employee will not be told that they need to improve before they were dismissed.

If you're a boss, that'll make it easier to manage, but workers however might feel aggrieved by the fact that they were not given the chance to improve.

So do these labour reforms make any difference to the small business sector?

"Theoretically I suppose it changes the atmosphere around setting up a small business. There can be little doubt, and I've come across it in practical situations on a number of occasions, that there is a distinct reluctance to go into business if you know you can, and to employ a person if you know that you cannot get rid of him very easily if he proves to be not up to scratch."

- Dr Azar Jammine, director and chief economist at Econometrix

South Africans need to realise that one of the big fault lines of the economy, is that the small business sector in this country, is far, far weaker and less omnipotent than it is in other emerging markets. Then you look at their growth rates, then you see why their growth rates are so much stronger, and why they don't suffer the same levels of unemployment as South Africa.

- Dr Azar Jammine, director and chief economist at Econometrix

"People have often complained that the burden on small businesses is just unsupportable, especially for the entrepreneurs who set it up. Instead of spending their time looking at business opportunities and marketing their goods, they have to worry about whether or not they can fire someone who is employed and just not up to scratch."

- Dr Azar Jammine, director and chief economist at Econometrix

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