Job shortages lead to more self-employed

Schussler was reacting to the Absa small- and medium-enterprise (SME) index which was released yesterday (7 April). Compilers of the index said there was an improvement in SA's "entrepreneurial spirit" in the fourth quarter of last year, which brought the number of self- employed people to about 1.2m.

The quarterly index, aimed at helping small businesses and policy makers, rose marginally to 93.4 points in the fourth quarter of last year from 93.2 points the quarter before, supported by growth in self-employment.

Small businesses are seen by the government as the engine for job creation and are needed to help address the country's chronic unemployment problems. The government has offered development incentives such as tax breaks and subsidies to boost SMEs.

SMEs have also played a significant role in tax collections for the 2012-13 financial year. Finance Minister Pravin Gordhan said last week that SMEs were major contributors to the R161.1bn income taxes collected from companies.

Accessing capital-intensive sectors such as mining and manufacturing has proven difficult for the self-employed, leading most entrepreneurs to venture into the trade and personal services sectors.

Absa head of sector solutions and franchising, Andre Rosslee, said it appeared that food retailers, quick-service restaurants and restaurants serving the middle-income market were less affected by the economic downturn, with some businesses operating in this area achieving record turnovers in December.

Companies have been struggling to hire workers amid a weaker economic environment. The Absa SME index showed a 0.2% decline in the number of employers from the third to the fourth quarter of last year, to 707,000 employers.

Schussler noted that some of the SMEs had felt the strain of the wildcat strikes that occurred in the second half of last year. The strikes saw some SMEs either closing down or merging.

Schussler called for government policy to be clear in order to add more employers. "We need more policy certainty for business. Employers want to know that the salary they agree to pay in the next 12 months remains the same. We also have to look at all the red tape, the rules and regulations."

Schussler expected SMEs to continue growing this year. He said while they were a big part of the solution, they should not be expected to be the only job creators in the South African economy.

Source: Business Day via I-Net Bridge