SMEs the engine room of job creation: Absa
Listed financial services group, Absa, believes that small and medium enterprises (SME) are the engine room for job creation in South Africa.
On Friday (14 September), Absa launched its SME Index in the banking sector. The data is extrapolated from Statistics South Africa’s information on various economic indicators that are issued regularly.
Absa Group’s chief executive for retail and business banking, Bobby Malabie said that, with the data collected to measure the number of people that have been employed by companies, versus the unemployment figures in the country over the last two decades, it’s quite evident that unemployment remains one of South Africa’s key challenges into the foreseeable future.
“This is especially rife in the youth category, where unemployment is as high as 50%, and its clearly unsustainable taking into consideration that we have 15 million people on social welfare, but only seven million are taxpayers,” Malabie said.
The Absa SME Index also shows that, while only about 270,000 out of the more than 1.9 million businesses employ five or more employees other than the owner, only 10% of those businesses employ more than 50 employees, and that is less than 4% of all employees.
The retail and business lead for Absa said that there has unfortunately been a consolidation of businesses (mergers, and partnerships), while others have been forced to close down due to high operating costs and other economic pressures.
“The Absa SME index will provide valuable information that allows SMEs to make better and informed decisions, with access to solid and reliable information that will help them to grow their businesses. The Absa SME index will also allow policy makers to make relevant policy decisions on SME development, high unemployment and job creation,” he said.
Economist, Mike Schussler, who worked on the Absa SME Index in partnership with Absa, noted that the idea behind the index is so that interested parties can ascertain how SMEs are fairing through a quick overview of just one index.
The latest employer figures show a decline of 5,000 employers in the second quarter, compared to the first quarter where the number stood at 700,000 employers.
The number of self-employed also declined to 1.243 million in the second quarter of 2012, from 1.281 million in the beginning of 2008. However, self-employed numbers are slightly up on a year ago, when the number was 1.231 million.
Malabie said: “It is through entrepreneurship that this country will create the much-needed five million jobs by 2020 – in every growing economy around the world, SMEs are the engine room of job creation.”
“This SME Index is a further demonstration to our commitment of becoming part of the solution towards job creation.”
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