DA urges Labour Minister to come clean on troubled state of Productivity SA, which is technically insolvent
The controversy-ridden Productivity SA - which has a pivotal role to play in the development and enhancement of productivity and competitiveness in workplaces throughout South Africa and within the country's crucial SMME sector - is technically insolvent. This is evident from the financial statements contained in its annual report for 2007/08. The consequences of this development for the South African working economy could prove dire - particularly in the context of the current economic slowdown, in which a growing number of local industries are in distress and in need of rehabilitation.
Productivity SA's liabilities exceeded its assets by more than R7 million on 31 March 2008; this is seven times more than the previous year. The independent auditors have highlighted this fact as an emphasis of matter, and pointed out that this raises significant uncertainty about the company's ability to continue as a going concern in the near future.
Further indications that all is not well at this entity include the fact that the number of days for sick leave has increased from 261 in the previous year to 434 in the current year, while the cost to the company of this unhealthy phenomenon has increased from R284 000 to R455 000 in the same period. Even more worrying is that during this financial year 14 staff members out of a total of 82 have resigned from Productivity SA.
Additionally, it is noted in the financial statements that "no provision was made for taxation in the current financial year", adding that "Productivity SA as an association not for gain of a public character qualifies for exemption in terms of section 10(1) of the Income Tax Act, 1962". However, the DA has a copy of a letter by SARS threatening Productivity SA with legal action for outstanding tax of over R2 million.
This worrisome state of affairs must be seen against the backdrop of allegations earlier this year that Productivity SA has fallen behind with its employer contributions to pension fund and medical aid benefits for its employees, and that employees have on various occasions not received their salaries on time.
Productivity growth is one of the key strategies to broaden the economic base and create opportunities for everyone - it has been shown empirically that sustainable growth of living standards, employment, and exports all depend on growth of productivity. Yet, according to the 2008 World Competitiveness Yearbook 2008, South Africa's competitiveness has declined from 50th position the previous year to 53rd position this year; however, its competitive rankings have fallen annually since 2006.
The DA submitted questions for written reply on the worrisome situation at Productivity SA to the minister of Labour a month ago, but is still awaiting his reply. We now urge Minister Mdladlana to come clean on the troubled financial state of Productivity SA. The sooner the problem is correctly diagnosed, the sooner it can be correctly addressed.
Statement issued by Anchen Dreyer, MP, Democratic Alliance spokesperson on labour, August 28 2008
