As the euphoria over the creation of the Department of Small Business Development has, to all intents and purposes, faded, once again, small and medium enterprises find themselves haunted by legendary challenges. One of them is the impact that the Labour Relations Act is having on their operations.
A sentiment shared by pundits and business owners alike is that the Labour Relations Act is blatantly anti-SME in its current form. Under the legislation, wage decisions reached between big businesses and vociferous trade unions in central bargaining are arbitrarily imposed on small businesses.
While corporations, which have billions in reserves to burn, can willingly comply with the legislation, it is foolhardy to think that small businesses, the majority of which are struggling to sustain their modest staff complements, can afford to pay the minimum wage.
Palpably, forcing small businesses to pay wages out of their reach is setting them up for failure. Already, Transform SA has learned that tough trading conditions are leaving most of them with no option but to reluctantly close shop, adding to the spiralling statistics of the country’s unemployed. Yet small and medium businesses, not government departments and parastatals or multinationals, are amongst the country’s biggest employers.
Doubtless, small businesses are the country’s viable growth engine, as it is becoming excruciatingly clear that it cannot attract the desired levels of multinational foreign direct investment (FDI). The country faces fierce competition from what are regarded as more ‘attractive’ destinations in emerging markets. And so, fostering a favourable environment for the growth of SMEs is the sure-fire way of achieving economic growth. And the bold step towards would be to exempt them from the punitive Labour Relations Act.