Guy Ryder. Picture: REUTERS
Guy Ryder. Picture: REUTERS

Permanent employment in small, medium-sized and microenterprises (SMMEs) has stagnated in the past year, while employment creation in large firms has remained weak since the 2008 global recession.

The World Employment Social Outlook report, released last week by the International Labour Organisation (ILO), has painted a bleak picture for global employment in its assessment of firms’ capability to meet its competitiveness and profitability needs while advancing long-term societal goals.

In SA, the government has pinned its hopes on the unlocked potential of SMMEs as it battled a stubbornly high jobless rate which stood at 27.7% in the second quarter of 2017.

The National Development Plan (NDP) also expects small and expanding firms to generate the majority of new jobs by 2030. About 90%of jobs created between 1998 and 2005 were in micro, small and medium firms, the NDP noted.

As the upward trajectory changed for the worse the world over, the UN’s labour agency has pointed to government policies as the key to reversing employment stagnation in SMMEs.

ILO director-general Guy Ryder said in the report that firms that invested in the sustainability of their workforce and other important factors of production such as innovation could be highly competitive.

This could be done without sacrificing the creation of decent employment, although he cautioned that companies could not do this on their own.

"Governments have a major role in shaping institutions that foster sustainable enterprises and inclusive growth, while workers and their organisations are important for advocacy of appropriate policies and regulations as well as representation," Ryder said.

According to a 2016 report compiled by Stellenbosch University for the state’s Small Enterprise Development Agency, a key limitation faced by SMMEs in SA was an inefficient government bureaucracy.

"To reverse the recent trend of employment stagnation in SMEs, we need policies to better promote SMEs and a better business environment for all firms, including access to finance for the younger ones," said Deborah Greenfield, the ILO’s deputy director-general for policy.

Access to finance and credit was also a major stumbling block for local SMMEs, according to the report.

"South African banks and lenders are more inclined to put resources in small businesses in their later stages of development," said the report.

It also listed "onerous labour laws" as an obstacle to business growth as well as lack of access to markets and an inadequately educated workforce.

During the release of the global unemployment figures, put at more than 201-million worldwide, ILO economist Sheena Yoon said the unemployment problem was just the tip of the iceberg. The quality of jobs created also remained a "pressing issue".

mahlakoanat@businesslive.co.za

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