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New Era Newspaper Wednesday August 30, 2017

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8 NEWS: OPINION Wednesday, August 30 2017 | NEW ERA SOEs and the retrenchment conundrum (Part 2) By Helmut Angula Rationale for the existence of SOEs During the 1990s, when public sector reform picked up steam in Namibia following the implementation of the recommendations of the Wages and Salaries Commission (WASCOM) establishment of state-owned enterprises was taking place against the backdrop of an unemployment rate of 35-40 percent, enormous levels of income inequality (a gini-coefficient of 0,70), widespread poverty (38% of Namibian households were considered poor) and slow economic growth. (Hansohm et al, 1999; Nepru, 1999) It was, however, believed that the outsourcing of noncore government functions and services to newly established SOEs would increase efficiency, because their key focus is on increasing outputs and decreasing operational (and labour) costs. The definition above, stated that SOEs are corporations, owned by the State at different levels, either central, federal, regional or local. This definition begs the question why the State or state institutions would seek ownership of a business entity. The answer to the question is grounded in common motivations behind state ownership internationally. These include what governments see as imperatives of developing strategic sectors and boosting the national economy. They also include fiscal, political and social considerations. Some of the commonly stated reasons for state ownership include situations where SOEs might: Provide public goods (e.g. electricity, water, national defense and public parks) and merit goods (e.g. public health and education Unam, Nust, Namcol and VTCs); Improve % discount on labour relations, particularly in ‘strategic’ sectors; Limit private and foreign control in the domestic economy (Namdia); Generate public funds. The State could invest in certain sectors and control entry in order to impose monopoly prices and then use the resulting SOE revenues as income (TransNamib, NamPort). Increase access to public services. The State could enforce SOEs to sell certain goods and services at reduced prices to targeted groups as a means of making certain services more affordable for the public good through crosssubsidisation (NamCor). State owned enterprises may also be established to: Sustain specific sectors, which are of special interest for the broader economy, and in particular to preserve employment. Launch new and emerging industries by channeling capital/investments into SOEs which are, or can become, large enough to achieve economies of scale in sectors where the start-up costs are otherwise significant (AgriBusDev). Control the decline of sunset industries (Telecom Namibia, NamPost). A sunset industry is defined as an industry in decline, one that has passed its peak or boom periods. They also include existing industries as they still provide important employment. They may benefit from protectionism policies to slow down the decline whilst sunrise industries develop (MTC, Namcor). Often governments have created and invested in SOEs because markets were imperfect, or the existing businesses in the private sector are seen as unable to accomplish critical societal needs such as effectively mobilising capital or building enabling infrastructure for economic development (DBN) In the Namibian context, the establishment of SOEs was based on the following considerations and objectives: To reduce the number of public servants; Reduce public expenditure/fiscal deficit; To create new employment opportunities as SOEs grow and gain greater market share in their sectors of operation; For government to withdraw from non-core activities that can be more efficiently performed by SOEs; To establish entities that can render services on the principle of user charges or full cost recovery basis; and for SOEs to become financially self-reliant and be open to competition. Retrenchment in Namibian law Retrenchment is defined as the act of dismissing an employee from a job. Such dismissal may be a function of various factors such as changes in technology, reduction in the scope and activities of a business, redundancy, and so forth. In Namibia, issues related to the dismissal of workers from employment is regulated by the Labour Act, 2007 (Act No. 11 of 2007). For starters, it is important to point out that the Labour Act does not employ the term “retrenchment.” It Helmut Angula rather refers to terms such as termination of employment or dismissal of employees. Be that as it may, retrenchment, termination of employment and/or dismissal all have the same effect. At the end of the day, someone loses a job and livelihood. Section 34 of the Act is the authoritative legal provision on matters of dismissal or retrenchment, which Namibian employers should heed. It is titled “Dismissal arising from collective termination or redundancy.” It provides that where or when an employer contemplates dismissing employees – and the reason for such intended dismissal is the reduction of the workforce arising from the re-organisation or transfer of the business or the discontinuance or reduction of the business for economic or technological reasons – an employer must inform the Labour Commissioner and the recognised trade union at least four weeks before the intended dismissals or retrenchments are to take place. Where there is no recognised union, information should be given to the workplace representative elected or chosen by the workers in terms of the Act. Whether employees at many businesses in Namibia are aware of and have been permitted to exercise their democratic right to choose their workplace representatives is a question for another day. In cases of intended dismissals, the Act obliges all employers to provide the following information to the Labour Commissioner and to the union or workplace representative: the intended dismissals; the reasons for the reduction in the workforce; the number and categories of employees affected; and the date of the dismissals. Not only are the employers required to provide the information as above, they are also obliged to disclose all relevant information necessary for the trade union or workplace representatives to engage effectively in the negotiations over the intended dismissals. This means that the list above is not a closed one. Furthermore, employers are required to negotiate in good faith with the trade union or workplace union representatives on: alternatives to dismissals; the criteria for selecting the employees for dismissal; how to minimise the dismissals; the conditions on which the dismissals are to take place; and how to avert the adverse effects of the dismissals; and select the employees according to selection criteria that are either agreed or fair and objective. The principle of good faith is sacrosanct in negotiations because without it, fairness and objectivity become impossible to achieve. Without it, the labour relations equilibrium is disturbed and the result is labour unrest and its negative consequences for the employers, the workers, the national economy at large and even potential threats to national security. Our Constitution places the principle of fairness at the centre of administrative actions and this includes decisions to dismiss or retrench workers. It must therefore be adhered to at all times without fail. EXPERIENCE RUACANA’S UNTAMED BEAUTY The position of Swapo on retrenchments by SOEs In the introductory sections of this essay, we laid out the rationale for the establishment of SOEs in Namibia. This was a conscious decision by the Swapo Party. Our point of departure is that SOEs were created to fulfil certain objectives. These include strengthening the economy, growing the industrial sectors in which they operate, strengthening specified strategic areas, improving service delivery, especially in less attractive or non-marketable remote areas, where private business are hesitant to invest; and yes, creating and sustaining employment for the Namibian people. SOEs are not only supposed to create employment, they are supposed to sustain such employment. It stands to reason that unchecked retrenchments are inimical to the concept of sustainable employment. The position of the Swapo Party vis-à-vis retrenchment and dismissals by SOEs is, therefore, selfevident. There are thousands of Namibians, especially the youth who are roaming our streets looking for work. Should our SOEs retrench workers, without considering other options, this will aggravate the already difficult unemployment situation in the country. It is unfortunate and regrettable that some of political leaders, particularly those in the opposition, as well as some managers and directors of Namibian SOEs have become, for a lack of better expression, triggerhappy to dismiss workers, without due regard to the prevailing economic and social circumstances. (To be continued) * Helmut Angula is the Swapo Party’s secretary for information and mobilisation. He submitted this opinion piece in his personal capacity. SPECIALS Escape to RUACANA EHA LODGE from 21 August – 3 September 2017 and enjoy a 25% discount on our normal rates. Includes breakfast. Double Room WAS N00 NOW N0 Single Room WAS N0 NOW N0 Tel: +264 (65) 271500 | Fax: +264 (65) 270095 | | | PO Box 62 Ruacana, Namibia. Sam Nujoma Drive, Ruacana *A Subsidiary of NamPower

NEW ERA | The computer that can smell explosives Page 10 Educating SMEs on navigating through recession Page 15 INSIDE USINESS This news is your business ank engages Unam’s nance students taff Reporter indhoek ank Windhoek’s People Development department engaged ith University of Namibia (Unam) final year students majoring n finance and accounting during a two-day career development orkshop held at Unam’s main campus in Windhoek last week. The two-day career development workshop, organised y Unam’s Faculty of Economic and Management Sciences, ook place from Thursday to Friday, and informed graduate tudents about career options and how to be prepared for the orporate world. ‘Preparing for Life after University’ was the orkshop’s theme. “Students discovered strategies for targeting the job market, riting strong resumes and covering letters and interviewing kills. The workshop encouraged them to be vigilant and aware f current affairs within Namibia, South Africa and the world. hey also had an opportunity to network with the graduate ecruiters, such as Bank Windhoek,” said Lazarus Shinkeva, a ecturer from Unam’s Economics and Management Sciences. Benster Ntesa, from Bank Windhoek’s Human Resources epartment, spoke to students about the bank’s career and mployment opportunities within the bank. He later gave hem advice on how to effectively apply for a job and prepare or a job interview. Elten Cloete, Bank Windhoek’s manager for leadership evelopment, informed students on how the corporate world perates. “At university, you often answer to one person – your rofessor. At work, your superior has to report to someone bove them within the structures of the company and same pplies to everyone else within the company. Sometimes ou are part of an organization with owners and multiple hareholders. They all have a say in how quickly you are able o succeed. Transitioning to the ‘real world’ might be difficult, ut developing your communication skills, honing your time anagement abilities and finding mentors can make it a whole ot easier,” said Cloete. “Any student can apply for Bank Windhoek’s Graduate evelopment Programme (GDP) and the Candidate Bankers raining Programme (CBT). They are free of charge and orm part of Bank Windhoek’s social development and mpowerment programmes. Applications can be collected and elivered at any Bank Windhoek branch or agency,” said Ntesa. “There is no one magic solution that will prepare students oday for tomorrow’s workforce, but giving them a ‘push’ in he right direction can help. Thank you Bank Windhoek for ollaborating with us,” Shinkeva concluded. The workshop was held for the first time this year and will ecome an annual event. Photo: Nampa At the show… President Hage Geingob (centre), his wife Monica Geingos (right) and their entourage pictured visiting the stands after officially opening the 2017 Ongwediva Annual Trade Fair (OATF) on Monday. Trade fairs provide important marketing opportunities: Geingob ONGWEDIVA President Hage Geingob says trade fairs provide an important marketing opportunity for local entrepreneurs, especially small and medium enterprises (SMEs). Officiating at the 2017 Ongwediva Annual Trade Fair (OATF) here on Monday, Geingob said such events serve as an opportunity to network and facilitate trade through business linkages between domestic and international entrepreneurs. “The beneficial effects of trade on overall economic development have been well documented,” the head of state said, adding that often the focus is on international trade within regional economic blocs. He pointed out that trade in goods and services within the national boundaries of a country are of equal importance and should be encouraged. Geingob further used the occasion to dismiss the blame that the government is the cause of Namibia’s economic downturn. “The economic downturn was caused primarily by external factors, particularly the subdued commodity prices and the decline in the South African Customs Union (SACU) receipts,” he said. The president added that insinuations that the government is to blame for the economic downturn are disappointing and not true. According to him, deep budgetary cuts and reform measures were initiated because the government values Namibia’s macro-economic stability. “That is why Namibia has never gone to the International Monitory Fund (IMF) for an economic bailout package or entertained any internationally imposed structural reform programmes,” said the Namibian leader. Geingob described the OATF as a leading trade and exhibition event on the Namibian business calendar, which stems from a humble beginning in 2000 and has grown to an event the town and Oshana Region’s leaders can be proud of. Ongwediva is this year hosting the 18th edition of the OATF. It started on Friday and runs until Saturday with 456 Namibian and international exhibitors. – Nampa Visit our new GIPF branch, now open at B1 City in Katutura! Business hours: 08:00 - 16:30 / Monday - Friday Tel: 061 205 1000 / Fax: 061 205 1209

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New Era Newspaper Vol 22 No 167