More jobs lost during 2016 than created in the preceding six years
The number of small business that are closing up shop is astonishing. Every week more and more reports reach me of a small businesses, here and there, going out of business. Their employees have to find jobs and their former owners have to sell their assets and survive on their reserves.
Since none of these small enterprises feature in the conventional economic metrices, it is very difficult, indeed impossible to quantify all the small businesses lost to the economy so far. The evidence is anecdotal at most, but certainly not hearsay. The difficult part lies in drawing valid conclusions from the numerous reports of businesses in trouble, or out of business altogether.
The job losses at bigger companies, particularly in the construction industry, make it into the headlines almost every week. These numbers are easy to confirm and to quantify however I still need to see verified jobloss figures for construction as a whole. I assume it will be horrific.
This is not based merely on opinion, it is underscored by many large projects where it is patently obvious there is nothing happening on those sites. So, the tentative indications from the industry itself are corroborated by emperical, observalble fact.
When it comes to small business, the picture looks somewhat different. There is no single chamber or similar organisation that collects this data and although SME features in the new name of the old Trade and Industry ministry, the effort here is more on promotion than on compliance and regulation.
Also, the original meaning of SME, in the rest of the world, refers to Small and Medium, and this includes businesses with up to 200 employees. In our context, a business with so many employees is considered large, so we formally had to adjust the definition two years ago. This gave us the SMME concept – small, medium and micro – which is far more descriptive of local conditions although our acronym did not quite get the sequence right.
Nevertheless, thousands of Namibians are employed in businesses with less than 50 employees. I dare say, thousands of Namibians earn an income in businesses with 10 employess or less. It is these two categories, small and micro, where enterprises are laying off workers by the dozens per week. It is also these two categories where it is practically not possible to collect all the data into a comprehensive, representative set.
One would think accurate data would be available from the office of the Labour Commissioner but this turned out not to be so. I was told the flood of notices became overwhelming since about October last year, and that the commissioner’s office struggled to handle the barage of lay-offs. Furthermore, this was only to process those severances where there were no disputes. All those where employer and employee did not agree, are putting even more strain on their capacity.
The exact size and contribution of the informal economy is anybody’s guess. Over the many years since Independence, there have been several studies, even with overseas small business experts flown in, to try and determine how much is generated by the informal economy. To this day, all the available information point to one crucial thing, the size of the informal economy is not precisely determinable. It can only be estimated.
I mention this because I am flooded with people who until recently worked somewhere for a small (micro) concern that will typically be labelled under the informal economy. These small enterprises are not registered with any ministry, nor with the Receiver of Revenue or the Labour Commissioner. When they shut their doors their workers are simply told to go, without any form of compensation.
The unreal number of people who knock on my door who have lost their jobs in one of there very small enterprises is what alerted me initially to the much bigger drama playing out in terms of employment, regardless whether it is in the construction industry, or the so-called formal economy, or in the informal economy.
We are in the final stretch before we see the new national budget. I believe the government has made very serious errors with their so-called counter-cyclical budgetting that started in 2010 and came to an abrupt end last year. It does not help inventing one prospertiy plan after the other, give it a new label, and then flog it to a credulous population who does not have the ability to dissect all these fancy schemes.
From now onward, regardless if we like it or not, productivity will have to be the watchword on every investment the government makes. Whether it is in the form of social grants, current expenditure or capital investment, the return on investment of every dollar will have to be counted. If it does not contribute to improved productivity, in other words higher, sustainable economic output, it does not deserve a place in the government’s budget.
If we do not heed this, we will simply repeat the 2010 to 2016 pattern. Jobs may be created for a short while, as long as there is money to borrow, but all these jobs will again be lost. In fact more jobs will be lost than were created because the economic disruption is so big. When it starts affecting all the small companies, then it neutralises the ability of small and micro enterprises to create employment and that is where long-term stable employment comes from.