Full speech by IOE Vice President to the ILO Mthunzi Mdwaba to the African Union/ILO Video Conference of African Ministers of Labour on 29 April 2020.
Ladies and Gentlemen
Colleagues and Friends
Asubuhi njema kwa wote and Ramadan Kareem
My name is Mthunzi Mdwaba and I am speaking here today in my role as IOE Vice-president to the ILO and consequently ILO Governing Body Vice Chairman. The International Organisation of Employers (IOE)is the largest network of the private sector in the world, representing 159 members in 150 countries, and over 50 million companies across its network.
The world is going through an unprecedented crisis. Never in living memory have we seen so many parts of the world shut down to this extent. In Africa, understanding that “tomorrow belongs to the people who plan today” many countries across the continent have implemented differing degrees of curfews or lockdowns in the face of the pandemic.
Prior to the COVID-19 crisis, many businesses across the Continent were already struggling due to internal, environmental, low levels of productivity and structural factors. The current situation is compounding existing problems, including levels of informality, with large sections of the population in precarious and informal working conditions and an average social protection level of 17.8% across Africa In fact, the way in which we approach informality has been in question for a long time and has now been exposed as being in huge need of an urgent review of how we deal with it all over the world. How for example do we explain that we cannot account for people such as street hawkers, drivers or driver owners of app based companies such as Bolt, Lyft,Uber and others that are self-employed which operate within the future of work paradigm, who are in the millions, but cannot be accounted for within the social protection/security perimeter, and therefore cannot be assisted with any rescue packages to ensure business continuity and job preservation? The sudden and immediate impact of the current crisis cannot by underplayed: millions of livelihoods and jobs are at risk.
Businesses remain passive and unproductive with mass losses of revenue, but overhead costs, such as wage obligations to workers and statutory payments remain constant. Business is showing solidarity, but we also need support, many are struggling for survival and many have already declared bankruptcy. The travel and tourism industry is collapsing: Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue, and Kenyan Airways has slashed costs which has negatively impacted their employees and will expose the consumer to high prices in the future due to lack of competition. Furthermore, ports are remaining idle due to massive disruptions in supply chains, and industries employing millions are at risk. Immediate action is needed to support business continuity, income security, protect lives and livelihoods, and build resilient economies and societies.
Many governments, including my own country South Africa and other stakeholders have pledged multi-billion economic stimulus packages which have regrettably not been sufficient or have not yet reached the real economy, especially SMEs. In some cases, there are no clear strategies yet for how this will be done. To a large extent, these stimulus packages have not addressed the critical needs of businesses that will guarantee sustainability and protection of jobs. Business continuity leads to protection and retention of jobs.
SMEs play an important role for minimizing the employment impact of the crisis, as they are the backbone of all economies in Africa and employ the majority of the workforce. There are still too many hurdles that prevent businesses, particularly SMEs from accessing funds quickly enough to survive. This is because mechanisms to access financial support are often too unclear, complex and difficult to activate, especially at the local level, when what is needed is efficiency and simplicity. We are in the crosshairs of a global and Continental calamity and there is an urgent need to think outside the usual disaster responses.
I agree with the AU Commissioner for Economic Affairs that there must be a paradigm shift and that Africa must speak with one voice and be united, however, this should encompass more than merely asking for debt relief for African countries. There is also an urgent need to change gears, change attitudes, shift our thinking and include productivity at the centre of all we do.
More decisive action needs to be taken to reduce the negative impact on businesses and slow the rate of job loss. These include direct interventions such as:
Flexible and non-bureaucratic access to low-cost loans to support business continuity;
Support for companies and workers in addressing the health risks of the pandemic through access to protective equipment, guidance and financial support
Direct wage or income support through wage subsidies and cash transfers
Proper access to income support and social protection;
Tax credits or tax deferrals for businesses
Employers’ organizations are key allies to deploy technical assistance and capacity building that will help SMEs build their resilience. This is because EOs have on-the-ground experience and can mobilize their networks of companies. I implore you to work with them, consult them and collaborate with them.
At local level, employer organizations are working with their technical teams making concrete proposals to the respective Governments on different fronts, seeking to contribute to alleviating the health, social and economic emergency situation. At the same time, employer organizations are also advising member companies in business management, continuity and survival plans. Some EOs have put in place dedicated hotlines to help companies (even outside their membership) decipher the local legislations and advise them on how to manage their workplaces.
Tomorrow, I will be meeting with the ILO Director-General Guy Ryder, together with the Employers Group in the ILO to have an exchange on the ILO’s response to COVID 19. My colleague and IOE President, Erol Kiresepi has given this same message to the G20 Ministers of Labour. We aim to also continue interactions with the AU in this regard. We must not forget that Africa’s Agenda 2063 and the 2030 SDG targets are in jeopardy of being derailed completely by what many have referred to as a train wreck crisis, compared to the Global Financial Crisis of 2008/9, referred to as a mere car crash in comparison.
It is clear to employers and businesses that both the AU and the ILO must fast-track efforts by providing quick, balanced policy and practical advice supported by evidence-based research that can make an impact in the African region. Full and productive employment and decent work will be a reality if, and only if sustainable enterprises continue to exist. To emerge stronger out of the crisis we need to urgently improve the framework conditions for business to ensure that companies can easily be set-up and create jobs, once the restrictions are loosened and the economy starts picking up.
I repeat my comment that “tomorrow belongs to the people who plan today”, with the understanding that we must work together more urgently than ever before to minimize the health, economic and employment impacts of this crisis, and prepare for an even brighter future. A key focus needs to be on SMEs (or MSMEs as applicable in different parts), because it is there where the bulk of jobs are and on the informal economy which needs our help the most.
Thank you, Asante sana, Merci beaucoup.