01 Jun Five ideas for jumpstarting the economy
NIKITA LALLA, Chief Executive | The severe economic impact of the coronavirus pandemic has been widely reported in media and is well understood by business owners across the country who are facing decreased turnover and unavoidable retrenchments. With National Treasury forecasting South Africa’s economy to contract by as much as 16% this year, creative and unprecedented measures will need to be considered in order to minimise the devastating impact of lockdown. “Covid-19 will be with us for two years,” said President Cyril Ramaphosa in a recent media briefing. “We are resolved to forge a new economy in a new global reality,” he said, citing the need for an infrastructure and maintenance programme and more and bigger public works programmes.
- Utilise the Infrastructure Development Act to fast-track projects
Infrastructure – including ‘network’ and social development infrastructure which are necessities in South Africa – has now gone beyond critical in both rescuing our economy and providing the assets our country needs. Unfortunately, infrastructure development projects in South Africa are known for slow procurement and implementation. These projects can be accelerated by use of the Infrastructure Development Act, which was signed into law in 2014. The act is aimed at fast-tracking strategic infrastructure delivery by shortening the time required to obtain regulatory approvals. There is no reason to further delay the implementation of projects because the necessary legislation exists, and funding is also expected to be made available. It has been reported that government plans to announce a R357 billion infrastructure programme after talks with the private sector and multilateral lenders.
- Change the format of the standard workday
To cater for physical distancing and the mandated health and safety requirements, many industries are facing changes in how they structure their work shifts. While a minimised physical workforce is required in order to adhere to regulations, this doesn’t mean that pre-pandemic levels of productivity can’t be achieved. For example, mines running on shifts should consider staggering their shifts, adding shifts to weekends, with additional ‘half-shifts’ each day. While this would mean running seven days a week, 8h00 – 21h00, it would mean that workers still achieve 45 hours a week, maintaining productivity as well as salary while maintaining the necessary safety standards. However, overtime pay will need to be forgone, as the weekly workload will still not exceed 45 hours.
- Give up traditional annual shutdown times
Traditionally, many industries in SA shut down over the festive season each year. In order to make up for lost time, this holiday should be forgone in 2020/21. The four-week break in productivity can be ill-afforded by a country in which economic activity remains disrupted. Instead, a short break from Christmas Day to New Year’s Day may have to suffice to ensure industries and education is able to recover lost time.
- Reduce public holidays in the coming years
While this idea is sure to upset many, the same logic follows as in point three. Reducing the number of public holidays in 2021 and 2022 could go a long way in making up for lost productivity. For the remaining public holidays, South Africa could move the public holiday to the closest Monday, thereby providing our hardworking people with a much-needed long weekend, reducing productivity losses during the week and still ensuring our hospitality sector remains viable.
- Change the way we tax
While the country enjoys the return of alcohol for sale, and looks forward to the eventual return of tobacco for sale, government should consider increasing the “sin tax” on these items for a specific period. This would boost much-needed tax revenue, and potentially enable a relaxation of tax on an increased number of staples and any items necessary for adherence to health and safety regulations. Tax breaks for volunteers and frontlines workers could also be considered.