Hidden R16 billion drain on South Africa’s economy Shaun Jacobs

[Nat Quinn]

South Africa’s economy loses between R12 billion and R16 billion annually due to employee absenteeism, significantly impacting economic growth.

The Occupational Care South Africa (OCSA) said this equates to 15% of employees being absent on any given day.

One of the hidden handbrakes in the South African economy is employee productivity, the biggest long-term driver of economic growth.

As employees get more productive, they contribute more economic output from the same amount of resources.

Wage increases in South Africa have historically not been matched with employee productivity increases.

This disparity is potentially a longer-term driver of inflation, as fewer goods and services are produced for greater remuneration.

Data from the Reserve Bank shows that the ratio between wage increases and employee productivity has improved of late, but there remains a large gap.

Labour productivity in the formal economy increased by 1.9% in 2023, while the average wage increased by 4.7%.

While wages must rise to keep pace with the cost of living, such a large increase in comparison to productivity improvements drives up inflation.

Growth in private sector wages is driving the overall increase, with private sector wages growing by 6.3% at the end of 2023 compared to a mere 0.4% for public sector workers.

However, the Reserve Bank said this may be driven by base effects, with public sector workers consistently receiving above-inflation increases for the past decade.

This has resulted in the government’s public sector wage bill skyrocketing, with the National Treasury stepping in to limit the increases state employees receive to cap this growth.

Rising wages resulted in a higher labour cost, which grew by 4.8% in 2023. This effectively raises the cost base of the entire economy.

The graph below shows the disparity between wages, labour cost, and South African employees’ productivity.

An easy way to improve productivity in South Africa is to limit the effect of absenteeism in the workplace.

Dr Themba Hadebe, Clinical Executive at Bonitas Medical Fund, said employee health and productivity go hand-in-hand.

“A holistic approach to corporate wellness, including physical and mental health, makes for a more motivated, creative and productive workforce.”

“Given the percentage of absenteeism every day in South Africa, a robust, risk-based corporate wellness programme is imperative,” said Hadebe.

“It’s a win-win situation for both the employee and the employer. Employees are healthier and are given the right support to manage their health. While employers have a healthier, happier workforce and increased productivity.”

Hadebe also noted the rise in a new threat to productivity – ‘presenteeism’. This is the phenomenon where, instead of taking sick leave, employees go to work while feeling ill and don’t perform at full capacity.

A major driver of presenteeism is mental health-related issues, which are estimated to cost the South African economy R235 billion a year.

This equates to 4.3% of annual GDP, with these workers losing around 27 workdays a year, and only nine of those are actual sick days.

The cost of mental health-related ‘presenteeism’ is estimated at R235 billion a year (4.3% of the GDP). Additional stats indicate that workers with depression reported the equivalent of 27 lost workdays per year – 9 of these were actual sick days.

There is also the the newly coined ‘resenteeism’ or ‘quiet quitting’, Hadebe warned.

Resenteeism is about employees who may appear to be busy but are disengaged and unhappy, with many doing the bare minimum due to burnout.

They stay at their current job due to financial constraints but are unproductive. It is the ultimate productivity killer affecting both small businesses and large companies across the country, he said.

 

source:Hidden R16 billion drain on South Africa’s economy – Daily Investor

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