The Running Commentary

Investors worry about SA Economic Policies


After recent press comments from the alliance partners, within the ANC, there are many investors who are worried about the direction that economic policies might take come April next year.

Quoted from the recent economic press conference by the alliance partners: “Decisive action is required to transform the patterns of wealth production and distribution,” and “Macroeconomic policy needs to support economic development and employment creation.”

Well I am not sure that these quotes can amount to a whole lot of action. Again my view is that this is simply the politically correct thing to say. Jacob Zuma has already been around the globe confirming that our macro economic policies will not change. Therefore if these changes were to materialize they would shatter investor confidence, as Zuma will be branded a liar and the economy would face an even greater melt down.

The fact is our labour laws are some of the more stringent in the world, our policing of them leave a lot to be desired.  I think this stems from the realisation that if we police them strictly, we will see even higher unemployment rates. What we should be working on is creative ways in which we can encourage employment and work in the free market system that we know we should. We cannot blend socialist political ideals with capitalistic intent.

My view is that the underlying socio-economic conditions stem from the high tax burden placed on the higher income earners. They, because they are in a position of “power” effectively re-negotiate the salaries to maintain their lifestyle. Government should rather be looking at tax incentives for these folk to employ people, in their private capacities. For example, if you employ a domestic to clean your house and you pay them the minimum wage, plus help contribute toward their retirement, then you get a tax break. This would encourage many new job opportunities, while at the same time reducing the funding burden on the government.

We should stop political rhetoric and look at creative, rather than punitive ways of growing the economy.

DADe lilleEconomic PolicyForeign InvestmentIDSouth AfricaZille

Mike • October 20, 2008

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