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The Global Competitiveness Index (GCI) shows that South Africa marginally improved its ranking from 54th last year up to 50th this year. This is welcome progress, but is mostly due to the continued excellence in our financial services and auditing sectors.

We would have performed a great deal better if it was not for strained labour relations and rigid labour market conditions. The GCI clearly indicates that there are government and labour-related constraints that are limiting South Africa’s competitiveness.

The labour-related problems become obvious when studying the following statistics:

Hiring and firing rigidity: 139 out of 142 (down from 86th last year)
Flexibility in wages: 138 out of 142 (down from 130th last year)
Tensions in labour relations: 138 out of 142 (down from 132nd last year)
Labour market efficiency: 95 out of 142 (marginally up from 97th last year)
The link between pay and productivity: 130 out of 142 (down from 112th last year)

The conclusion to be drawn from the index is clear: South Africa has one of the world’s most restrictive, regulated and inhospitable labour dispensations in the world. This is why we are struggling to create jobs and grow the economy.