The franchise sector and FASA call for an entrepreneurial “CODESA” to tackle unemployment and create jobs

Reacting to two announcements this week - on the proposed national minimum wage of R20 per hour or around R3 500 per month and unemployment rising 27.1 percent, the highest in 13 years – the franchise sector, which contributes 11.6 percent to the country’s GDP and employs over 400 000 people through its 757 franchise systems and their 35 111 franchise outlets, is keen to find  solutions that will maintain a balance between paying a liveable wage and creating the necessary jobs to grow the economy.

This is according to Vera Valasis, FASA’s Executive Director.  “The franchise sector is unique in that it is represented in seventeen different business sectors – many of whom have their own sector bargaining councils setting their own minimum salary scales. “Whilst we wholeheartedly support the move towards paying a liveable wage, and many of our franchise owners already pay their staff above the minimum prescribed wage, those in the more rural areas where lower sales are realised may struggle to meet the prescribed minimum wage.”

Compared to the rest of the world, South Africa’s level of productivity lags behind in many sectors and is well below international standards. Already burdened with rising costs and a sluggish economy, increased wage bills may force many franchisors and franchisees to retrench excess staff and rather concentrate on upping the productivity of existing staff and paying them according to productivity outcomes.

Ever the optimists in the business milieu, franchise entrepreneurship is always looking for the silver lining and solutions to challenges.  The silver lining, according to Naas Du Preez, FASA’s Chairman and MD of Oasis Water is that a rise in basic wages will mean more disposable income – thus boosting the economy. 

Given that small businesses are creating two thirds of the jobs in developed countries, the Franchise Association of South Africa (FASA) plans to spearhead an entrepreneurial “Codesa” in early 2017 to find new ways to empower small businesses and entrepreneurs in bridging inequality, creating prosperity and employment.
Says Tony Da Fonseca, FASA’s Chairman-elect for 2017, “Solutions to the employment challenge need to be tackled as a matter of urgency. We as the franchise community, have the business format expertise to assist in the establishment of new franchises in a variety of sectors not yet franchised – be it in agriculture, manufacturing or even in government’s social services. But we need to mobilise business and industry leaders, government and civil society to play a part in freeing up economic regulations and find creative solutions to allow entrepreneurship to flourish.”

Scenario planners Clem Sunter and Chantell Illbury, of “Mind of a Fox’ fame, who have long called for a national economic “Codesa”, have joined FASA in the planning and facilitating of an entrepreneurial “Codesa”. Government’s goal of 5 million jobs by 2020 means that, for real economic growth to happen, 90% of South Africa’s jobs will have to come from small business. Or rather, as Clem Sunter puts it, “we need to create one million businesses and the rest will take care of itself.”