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SAIPA: Escalating labour cost may threaten business affordability

23 Sep 2011

The South African economy was being hammered by damaging strikes by industry after industry and now there is a need to step back and examine the broader effect of these disruptions in a country where unemployment is at alarmingly high levels.

Ettiene Retief, chair of the tax committee at the South African Institute of Professional Accountants (SAIPA), argues that - while he understand workers' reasonable aspirations to earn a living wage, he feels that other factors must not be ignored, including the global nature of competition-dependant business, the rate of inflation and the reality that investors have options - and that they will exercise them.

"When wage increases of well above the inflation rate are demanded, we have to sit up and take notice," he said, adding that if that labour cost escalates dramatically, affordability is threatened. While labour law should not allow employers to take advantage of employees, Retief believes that bias towards labour law is an obstacle for economic growth and foreign direct investment.

Read the full article on www.businesslive.co.za.