Thursday, 11 May 2017

Statistics and Lies

The Minister of Labour, Mildred Oliphant, has once again complained that companies are not adhering to the wishes of Government in the employment of Blacks and women in senior positions. She quoted a series of statistics, to prove that she really has no understanding of the situation, and that the expectations of businesspeople are being realized.

“According to Statistics SA’s 2016 third quarter figures, whites account for 9.5% of the economically active population (EAP) and black Africans 78%. The commission’s 2016-17 report says whites fill 68.5% of top management jobs, six times their EAP. Africans account for 14.4%. Males fill 78% of top management jobs. Whites account for 58.1% of senior managers compared to 22.1% of Africans. At the lower levels, Africans fare better, but still don’t match their EAP figures, accounting for 60.2% of skilled technical workers and 76.1% of semi-skilled workers.
“The continued high rate at which the white group appears to be afforded preferential treatment for recruitment, promotion and training opportunities at [top management] level is of concern. This trend renders it highly unlikely to achieve equitable representation at this level in the near future,” concluded the report [by the Commission for Employment Equity]. The situation is similar at senior management level.”

Frightening figures, when viewed from the point of view of the Government, figures which demonstrate the same lack of effectiveness as the Government under the ANC has shown in virtually every other sphere of the economy in which it has been active. However, when viewed rationally, the figures are both understandable and encouraging.

Let us look at some of the details, and really understand them.

Whites fill 68.5% of top management jobs, six times their EAP. Africans account for 14.4%, while Whites account for 9.5% of the economically active population (EAP) and Black Africans 78%.

Apart from the factually incorrect description of Blacks as ‘black Africans (which ignores the fact that numerous Whites are descended from families that have been in South Africa as long as most of the Black families), one must understand that a large proportion of the economically active Black population is engaged in work which has no potential to develop their education, knowledge and skills to the level where they can become effective top management. The statistics of that proportion are not presently available to the writer, but it is a safe bet to assume that, of the 78%, at least 50% are not qualified in any way and have little prospect of becoming qualified for a top management job, and another 20% of the remaining 38% are not yet old enough to have gained the experience required. Yes, top management requires many years of experience. If the Blacks who are educationally-qualified for the top management jobs had started their climb up the ladder in 1994 (assuming an adequate education), they would have gained 23 years of experience. How many of the top managers of large companies are aged less than 44 years? Again the statistics are not available, but the answer is certainly less than a handful. Why 44 years? Assume that an aspirant for top management completes Matric at 18, then a three-year degree, that person started work at age 21. Add the 23 years since 1994. He or she is now aged 44. Most of the Blacks who will become top managers of large companies are still working their way up the ladder, after gaining a good education and years of experience in many of the activities that are essential knowledge for the top job. In an interview on SABC this morning, the Minister of Social Security inadvertently confirmed this fact, when she stated that SASSA required at least five years to establish an in-house ability to pay social grants, after having worked on the problem since 2014 – a total of 8 years to do a project that a competent European or American company would certainly complete within 2 years (after all, CPS was able to develop the ability within less than a year!). She explained that the organization of SASSA, which was set up to do only the payment of social grants, consisted of low-level management. That statement is one of the few believable statements by the Minister, who has become known for obfuscation, circumlocution and even the use of Russian, in answering embarrassing questions. The simple fact, known to all of the companies burdened by the law requiring them to employ a certain ratio of ‘previously disadvantaged persons’. Is that there are simply far too few competent Black persons with the education, qualifications, skills and experience required to perform competently in a normal economy, never mind the minefield that the South African economy has become under ANC rule.

The situation on the ground is that a company’s prime requirement is to earn a profit for the shareholders. Once that is being done, the company has the freedom to comply with all the other nice-to-have objectives, such as Black Economic Empowerment. To do that, every top manager must perform at the peak level of performance expected from him or her. Where the profit flow is good, there is enough surplus cash to do the things that are required to meet the Government’s unrealistic expectation (that every Black is born with all the skills and experience to perform excellently – they are not, nor are Whites, Indians, Coloureds or Chinese), with a person being appointed to do a job that he or she is not qualified or experienced to do, supplementing his or her efforts with a skilled (probably White or Indian) who will filter out the gross mistakes deficiencies and add some on-the-job training in the process. That, of course, introduces managerial friction and inefficiency, and adds a considerable burden of cost, all of which weaken the market position of the company and detract from the attractiveness of the country as an investment destination. If you doubt this, ask why so many ‘proudly South African’ companies have largely withdrawn from the country (e.g. Anglo American, S A Breweries, Gencor) and others are doing whatever they can to minimize their exposure to South Africa. Ask why the economy is in a decline, where, previously, it was regarded as the ‘engine of Africa. Ask why the creditworthiness of the country has declined to the point where two of three Ratings Agencies have rated the country as ‘junk’. Ask why every Government-controlled business entity is in a state of collapse. Why cannot SAA make a profit, when the non-Government airlines do, why Eskom requires an ever-increasing tariff for the supply of the energy which, in the past, has been a major driver of economic growth, why the SABC requires additional funding every year, why SANRAL is rapidly approaching a fiscal cliff, even after a questionable accounting revaluations of its assets in order to maintain balance sheet solvency, could why PetroSA manage to deprive the country of its strategic fuel reserve? The root cause in every case is unqualified management. The compounding cause, corruption, is a direct result of the lack of moral honesty that is a prime element of a competent top manager, a quality that is built only by years of exposure to quality managers, absorbing their beliefs and morality.

“At the lower levels, Africans fare better, but still don’t match their EAP figures, accounting for 60.2% of skilled technical workers and 76.1% of semi-skilled workers,” the report continues. That again is no surprise. Although ‘Africans’ (correctly defined) occupy all but a tiny fraction of such positions, Blacks are severely disadvantaged in their capacity to occupy skilled or semi-skilled positions simply because the standard of education they receive is at an abysmally low level. The Department of Education systematically attempts to hide the real facts of this, by lowering the pass mark so that more ‘learners’ gain their piece of paper, but the truth is that an education at a level required to meet the minimum standards of most sophisticated employers is not available from the State schools. If there is any blame to be apportioned for this situation, it lies squarely at the feet of the ANC, which disrupted a proven skills-building system and introduced a system that had been proven elsewhere in the world to be defective. Once again, the ANC refuses to accept the advice of people who really know the truth, preferring to accept their ‘gut feel’ and the universally-disproven communist doctrine that they use as a master plan.

The figures issued, if correctly understood, are encouraging, in that they show that the Black citizens are working their way up the system, as any intelligent observer would expect. If we disabuse ourselves of the racist rhetoric spewed by the Government, it is clear that employers at all levels of the economy, would be delighted to find a qualified employee, whether at top management, skilled or semi-skilled, and would appoint such a person to an appropriate position. They would be pleased to provide the training, education and exposure that would maximize the value of such a person to the company. Every employer needs good people to sustain their growth into the future. Equally, every employer would be unconcerned that the best candidate for the job is Black or White, or any other race. Only the Government (and the few other Parties espousing similarly lunatic racial criteria, rather than promoting the economic growth that will create the situation where every person will have the job they want) would wish to push an unrealistic policy to the extent that the country’s already fragile economy will collapse.

The best thing that the ANC could do would be to expunge any reference to race from their lexicon, and that would be followed by getting out of the way of the hardworking people of all races who are working to make the country of Nelson Mandela succeed, for all its citizens.

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