Programme Director,
Chairperson of Productivity SA, Mr Alwyn Nel,
Members of the Board of Productivity SA
CEO of Productivity SA, Mr Bongani Coka
Distinguished Guests
Ladies and Gentlemen

The launch of the Productivity Statistics 2013 takes place against the backdrop of the release of two key reports for global competitiveness. In the second quarter of the year, the World Competitiveness Yearbook (WCY) 2014, published by Switzerland‘s Institute of Management Development (IMD), rated South Africa 52nd out of a total of about 60 countries in terms of competitiveness. The ranking is derived out of rating the ability of 60 industrialised and emerging economies to create and maintain an environment that sustains the competitiveness of enterprises.

On the other hand, the Global Competitiveness Report 2013-2014 which assesses the competitiveness landscape of 148 economies, rates South Africa at number 56. Whilst The World Economic Forum's Global Competitiveness Report for 2014–2015 and the World Competitiveness Yearbook (WCY) 2014 derive their results from an Executive Opinion Survey, the ratings cannot simply be brushed aside.

The bottom line is that South Africa faces a myriad of challenges and one of the areas that requires urgent attention is the issue of unemployment. With the unemployment rate currently hovering at about 25 percent, the need to increase the competitiveness and productivity of South Africa has never been greater. Ladies and Gentlemen, with that grim touch of reality, I welcome you to the release of South Africa‘s 2013 Productivity Statistics. Productivity SA has been releasing this important publication for the past 10 years.

The government‘s road map for economic growth, the National Development Plan (NDP) aims to:

    stimulate real economic growth;
    eliminate poverty; and
    tackle unemployment and job creation.

The release of the statistics is a pathway to understanding which areas in our economy need urgent intervention, thereby ensuring adequate support for the NDP. The renowned Irish and British mathematical physicist and engineer, Sir William Thomson coined this popular phrase, “If you cannot measure it you cannot improve it.”

This phrase could not ring much truer than today. By definition, productivity is an economy‘s ability to produce goods and services capital inputs and labour inputs. Productivity is in essence the ability of persons, enterprises, economies or any other defined system to efficiently use the resources at their disposal, to produce products or offer services that satisfy the consumer or user.  Productivity and competitiveness are therefore inter-linked.

Competitiveness is a field of economic theory that analyses the facts and policies, shaping the ability of a nation to create and maintain an economic environment. This process and interplay sustains value creation for a nation and its enterprises and brings more prosperity for its people. Competitiveness ordinarily refers to the relative position of an enterprise or nation in comparison to other enterprises or nations in the global market.

These two concepts are linked and increased levels of productivity will result in higher competitiveness of the goods and services produced in a given economy. Through productivity measurement, a nation‘s economic performance can be determined, thereby providing or creating clear indicators for areas of improvement.

Primarily, the task of the Department of Labour is to implement policies that foster and contribute to coherence and integration in the economy as well as publish legislation that regulates labour practices and activities.  It is thus the aim of the Department to steadfastly play a significant role in reducing unemployment, poverty and inequality. This would be done through a set of policies and programmes developed in consultation with social partners. Ultimately these interventions are aimed at improving South Africa‘s economic efficiency and productivity.

Ladies and gentlemen, the organisation responsible for the collation of the statistics, Productivity SA, is a public entity under the auspices of the Department of Labour. The role of Productivity SA is the enhancement of South Africa’s commercial productivity and global competitiveness in a concerted bid to boost the economy and create jobs.

To achieve this, Productivity SA has to perform the following functions:

    promote a culture of productivity in workplaces;
    develop relevant productivity competencies;
    facilitate and evaluate productivity improvement and competitiveness in workplaces;
    measure and evaluate productivity in the workplace;
    maintain a database of productivity and competitiveness systems and publicise these systems;
    undertake productivity-related research; and
    support initiatives aimed at preventing job losses.

Productivity Statistics and Productivity Month, which starts tomorrow, is what bring us here today. Ladies and gentlemen, Productivity Statistics Report enables all key stakeholders including government, business and labour to scrutinise how the South African economy is performing. It is through this “magnifying glass” on economic performance, that the country can tackle meaningfully some of its key challenges such as; poverty and unemployment.

The statistics are crucial in understating how an improvement in productivity in the private and public sectors could help stimulate the economy with benefits such as job creation. What comes out very clearly is that, South Africa faces a challenge to improve on its competitiveness position and ensure that the improvement translates to improved national productivity.

Ladies and gentlemen allow me to share the Productivity Statistics 2013 highlights.

The Gross Domestic Product growth rate of South Africa showed a slow-down in 2013 to 1.9 percent compared to the 2.5 percent of 2012.  There was a marked improvement in the GDP growth rate of the primary sector together with growth in the construction sector relative to other sectors.
Within the private sector, the tertiary sector performed remarkably contributing 61.5 percent of the total real output of our economy. Notable performers in this regard included amongst others, transport, communication; wholesale, retail, catering and accommodation; finance, and real estate.

It should be noted that the increase in the real output growth in the agriculture, forestry and fishery sectors occurred despite a decrease in labour productivity. This drop in the labour productivity growth rate was also accompanied by a negative growth rate in capital input implying that  labour was not empowered enough to increase labour productivity.
The relationship between the productivity indicators in the mining sector highlights that in order for the sector to improve its real output, additional labour is required, meaning that the sector has been operating below its optimal efficiency in 2013. This is an area we need to improve on as a matter of urgency.

The productivity indicators for the manufacturing sector show that the decline in its real output growth rate was mainly due to a decrease in multifactor productivity in 2013 where both labour and capital share declined. This indicates a contraction of the sector despite interventions by government.

In 2012 and 2013, the electricity, gas and water sector was under pressure and this was reflected in the productivity indicators. The situation was underlined especially by the decline in the capital, labour and multifactor productivity indicators. Furthermore, the relatively lower growth in compensation of employees in 2013 compared to 2012 in relation to labour input growth, suggests that there was a reduction in the number of highly paid employees. This further suggests that the unit labour costs should not be taken at face value, but rather an investigation of the changes in the composition of labour between skilled and semi-skilled should be taken into account. This is yet another area that must be attended to, urgently.

Based on productivity indicators, the growth rate in the real output of the construction sector both in 2012 and 2013 was supported by the improved growth rates of labour and multifactor productivity. Another key factor for consideration was the improvement in capital utilisation in the sector. The positive impact on real output growth of the increased capital utilization in secondary sector (that is manufacturing; electricity, gas and water; construction) was only realised in the construction sector. Steady improvement in this area will add to productive gains for the future.

The growth rate of real output in the wholesale, retail, trade, catering and accommodation sector was due to an increase in capital, labour and multifactor productivity in 2013. However, what is important is to note that the 2013 productivity growth rates were lower than those of 2012 suggesting a contraction in the growth of the sector. This is another area that requires our attention.

The slower positive growth in real output in 2013 of the transport, storage and communication sector was supported by a strong growth rate in labour productivity despite declining capital and multifactor productivity rates. There is also room for improvement in this area.

The continued growth in the real output of the finance, insurance, real estate and business services sector in 2013 was stimulated by the growth rates in labour, capital and multifactor productivity and supported by growth in capital utilisation. This area is a source of encouragement and inspires us to continue to improve.

Productivity Month concept

In 1984, the first week of September was designated as Productivity Week on the national calendar to focus awareness on productivity of the country. Over the years the campaign intensified and in 2003 it developed into a fully-fledged Productivity Month that has proved to be a landmark annual campaign. This bodes well for the future of this entity in particular and the work of the department going forward.

Productivity month is aimed at generating awareness of the importance of improved productivity in all facets and to solicit buy-in from private sector, government and the public at large.

As an influential member of the international community:

    We need to investigate how we can partner more meaningfully with the Japanese Productivity Centre who has worked closely with us in the past. There is skills and knowledge transfer to be derived from this relationship;
    I am made to believe that the International Labour Organization (ILO) has an internationally accredited tool and have expressed a wish to partner with us, in establishing a School of Excellence in our country. This is an opportunity we should also explore given the ILO’s unique approach to tripartism and social dialogue.
    The Institute of Management Development in Switzerland who produce the annual competitive indicators for us, in partnership with Productivity,  is also an organization we need to leverage a lot more as we brace ourselves to work harder on our productivity gains.

Programme Director, the broader objectives of Productivity Month are:

    to promote productivity within South African industry;
    to raise awareness of the potential role of productivity in growing and developing our economy;
    to promote Productivity SA’s programmes and the outcome-based solutions to assist ailing companies; and
    to increase South Africa’s competitiveness.

Ladies and gentlemen, there is a different theme every year to launch Productivity Month.  This year’s theme is ‘Productivity is everybody’s business’. To celebrate Productivity Month, several workshops in different provinces and regional awards will be held in the month of October. This will culminate in the National Productivity Awards Gala Dinner on the 30th of October this year.

We must bear in mind that productivity affects the entire nation, therefore improving awareness means changing culture and behaviour. It means applying productivity principles in our own lives be it at the workplace or at home. Raising awareness on the significance of productivity in social and economic development is crucial. It plays an important role in creating a productive culture in all sectors of society.

As a country and a nation, we must appreciate the correlation between productivity and competitiveness. I therefore reiterate the importance of organizations, companies, government departments to instil a culture of productivity, a culture of efficiency at the workplace. Such conduct has far reaching implications for the good of the economy, for the good of the labour market, for the good of the people of South Africa. Let us all work together to move our country forward.

As I conclude, I also take this opportunity to convey best wishes from the Minister of Labour, Mrs Oliphant, on all your endeavours in making Productivity Month a success.

I thank you.

Issued by: Department of Labour