Tito's good intentions tripped up by bureaucratic notions
TRAINING of the workforce at all levels and in an ongoing manner is essential to economic growth. And as Labour Minister Tito Mboweni says, it has to be paid for. He proposes a levy on payrolls of between 1% and 1.5%.
It appears that the minister and his bureaucrats have in mind a fairly complicated scheme in which employers will be given grants if they reach certain targets, small entrepreneurs will be assisted and a whole range of deserving cases will benefit. Many decisions at different levels will have to be taken. Boards will have to be set up, commissions put in place, offices rented, cars leased, computers acquired and so on.
What we are looking at here is typical of how the road to hell is paved with good intentions. There is nothing wrong with the government being keen on training, particularly in South Africa where it is so desperately needed. But what we must avoid is an approach which creates new and costly layers of bureaucracy and, in what is the height of illogic, imposes new costs on the creation of jobs.
Nelson Mandela's fellow Nobel Prize winner, Milton Friedman, once told me: If you want less of something, tax it. By imposing a levy on payrolls, surely Mboweni is providing business with incentives to lower their payroll costs and the only way to do that is to use more machines and fewer workers. God forbid if Cosatu's demand for a 4% levy had been granted. That would have caused a serious dent in employment and slowed job creation markedly.
But then Cosatu is not known for its grasp of basic logic and, in any event, would much prefer a command economy in which it issued the commands. It is of no interest to them that command economies have utterly failed, leaving misery, pollution and ruin in their wake.
However, even Mboweni's more modest proposal is dangerous. Further, it is quite possible to attain the government's objectives without adding yet another layer of bureaucracy onto the shoulders of the taxpayer.
In Australia, for example, companies are required to spend 1% of their turnover on training and part of the auditor's task is to see to it that these funds have been spent. That way, the onus is on the private sector to spend money training its staff. It is the private sector which will have to administer such programmes, using approved methods to do so, and it is the private sector which will have to see to it that these funds are spent efficiently. Thus the country, the workers, the economy and the companies will all benefit without the need to create new structures (ah, all those lovely structures). We can be guaranteed that these structures would absorb most of the levy on payrolls with only a small part going into training. That, of course, is invariably what happens in government.
We are already a heavily taxed country with only a small proportion of the workforce registered as taxpayers. Taxes on businesses are passed on, in one way or another, to the consumer. So not only are levies of the kind proposed by the minister the enemy of job creation, they are also the enemy of the consumer.
To be in line with what is happening all over the world we need to be scaling down the role of the government. We need to be reducing taxes and levies, not introducing new means of shifting resources to the bureaucracy. The minister's intentions cannot be faulted. His proposed method of achieving them lacks imagination, innovation and initiative. It is redolent of old, tired and discredited approaches which rely on the belief that it is only the government which can sort out our problems when we are quite capable of doing so ourselves. Government's role, in as many areas as possible, is to be the referee and not the player, to set sensible rules for the game and to see to it that players obey them.