Job Creation - the Reality?

 

The report by the Jobs Creation fund, that the Fund had created a large number of jobs at a capital cost of R17 000 per job, has been subjected to considerable skepticism.  Creating jobs is a science, and one may be entitled to wonder what knowledge or experience an ex-Trade Union Leader could have in the field.  Any sustainable job that involves more than pick-and-shovel work would seem to require a greater investment than the claimed figure, just in the salaries of the people to be employed.  A business doing business with the Government, the easiest way of doing business for a Black person in this economy, would need, say, a month to arrange the business – you can’t start even a building business without any track record, unless, of course, you have the sort of connections that Julius Malema seems to command – and then a month to do the work.  Submit your invoice at the end of the second month and hope that the Government pays it at the end of the third month, or, possibly, at the end of the fifth or fifteenth month – much more likely, according to history – and the working capital fund required simply to pay salaries will amount to at least three to five months’ of salaries.  Let us estimate an average wage to the worker of R8 000 per month with five workers, the salary of the top Manager at R30 000 (equivalent to a share of R6 000 per direct worker), and an overhead, to take into account bookkeeping, transport, transport, leave pay, levies and contributions and all the numerous costs required to run any business, of only ten per cent of the above values.  That gives a total of R15 400 per job per month!  If the carry has to be at least three months, the working capital requirement alone is at least R46 200 per job, somewhat more than the proud boast of R17 000 per job funded, or that estimated R40 000 per job in total capital contribution.

That analysis indicates that the jobs so created are almost certainly mainly in the service sector, which is notoriously subject to quick failure, and are likely to have a very low Multiplier Effect factor.

One is tempted to suggest that the Jobs Creation Fund would have been better served in accepting the offer by a substantial expert in the field of Job Creation, to deliver 350 000 jobs within three years at a total contribution by the Government of only R7 000 000.