New government job creation bid for schools and SMMEs

A new government-private sector effort will begin this month to help schools and small and medium businesses overcome staff challenges in an effort to create jobs for potentially millions of young people.

Human resource graduates will be placed as interns at small and medium enterprises with their pay partially subsidized by government. SMMEs, which employ 75% of those who work, have stopped employing - stats show that close to half a million small businesses have closed in the past five years with the loss of almost 2,5 million jobs.

"This is a serious problem because SMMEs employ 75% of those in jobs. And businesses are losing out on their SETA Skills Levy refunds - which can amount to tens of thousands of rand a year - because they simply don't know how to do the paperwork, or lack the time," Marjie Harrington, CEO of Human Resources Support Solutions said.

She said too that school principals were overwhelmed with the challenges facing them of good teaching, ensuring textbooks arrive, and day-to-day management. "Teacher's issues are often pushed to the bottom of the pile. This ensures demotivated and often angry teachers, and that in turn impacts on the education our children receive."

Harrington said small and medium businesses are losing hundreds of thousands of rands a year on average, as they struggle with poor staff relations and the bureaucracy of managing their employees. "Many close and that cuts jobs."

* Last year the Adcorp Employment Index noted that 440,000 small businesses had closed over five years. In 2001, around 250 000 people were involved in starting their own businesses. In 2011, only 58 000 people were trying to do so--a decline of 76%. The reduction in entrepreneurial activity over the past five years has reduced the economy's job creation potential by around 2.3-million jobs.

* The World Bank's recent Doing Business report shows that in terms of total tax cost and efficiency, South Africa's ranking has fallen from 18th to 44th out of 183 economies--a drop of 26 places--between 2011 and 2012.

* And labor conflict has seen the number of cases dealt with by the Commission for Conciliation, Mediation and Arbitration increase from 128 000 to 156 000 a year between 2004 and 2011.

Harrington said that thousands of human resources graduates are without jobs as small and medium businesses try to go it alone with staffing. "A lose: lose situation has been created," Harrington said, "We have also found that many SMMEs are starting to flout labour laws because they're struggling to survive. They'd rather get by without HR support, or spend a fortune on consultants, and have only minimal staff, and that has stopped job creation."

It also damages companies. A study by HRSS shows that this can cost SMMEs, hundreds of thousands of rands a year each, or at least 10% to 12% of their profits. They also see days and weeks lost to strikes or time spent at the CCMA, or do not grow to their maximum potential because they avoid hiring new staff and the potential labor disputes they fear each new employee potentially brings.

"Human resources is a high-level skill, employers forget the amount of administration involved, and so many are now ignoring it, and that can have very expensive consequences for them if they get taken to the CCMA or Labour Court."

HRSS began their study two years ago after Marjie Harrington said she kept hearing similar complaints from small businesses. "Take as an example, two Gauteng companies with 13 employees each, one in engineering (A) and the other in manufacturing (B). A spends 92 hours a month on HR; B spends only 18 hours a month on HR.

"When we began totting up the costs of staffing - the paperwork, CCMA, training, helping staff with on-the-job issues, and out-sourcing, we found that the costs at A were R297,000 per year on HR, or close to R1,903 per month per employee. If they use an intern that has been through the HRSS programme they will pay R30,000 for expert assistance, and save around R262,000 on wasted expenditure through consultants and errors around employee management.

"B's costs were more than R238,000 a year - or R1,525 per month per employee. He also frequently flaunts labour legislation. The placement of a HR intern at B would cost R2,500 per month (or R30,000 a year). This equates to a saving of R203,000 a year. These companies claim those HR costs were around 10% of turnover.' Harrington said, "those are ridiculously high costs, even the companies were shocked when we did the calculations with them. None of them have HR staff because they claimed they couldn't afford the cost."

Armed with the data, Harrington approached the Department of Education, the National Skills Fund, and the National Youth Development Agency. They agreed to back HRSS in its recruitment and training of human resource graduates to work as interns at SMMEs and schools.

"Their wages will be subsidised and they will be mentored by a highly skilled HR professional. It gives companies the opportunity to benefit from sound HR management, and the cost reductions, and money injections (from levy and other paybacks). From the point-of-view of the previously unemployed graduate, he or she gains valuable experience, earns some money, but most importantly has solid experience and references to put on his or her CV.

"We also hope that armed with new confidence this will encourage companies to start hiring again."

HRSS launches their initiative in Benoni on May 6. It will initially focus only on Gauteng but after six months will begin expanding nationally.