Wednesday, November 24, 2010

SA government wants to control what you are paid

governmentrefundThe so-called freedoms gained by the democratic elections of 1994 are in jeopardy from all fronts. Just recently a furore broke out in this country, where the ANC wants to curb free speech in the newspapers. Then, they started calling for nationalization of mines. They further also want a National Health Insurance (NHI), which you as a citizen will have to pay for, whether you use it or not!

This government, run by the ANC, now wants to tell private businesses how much of an annual increase they may give their workers, especially if a person earns a certain amount of money. The suggestion is that a cap is put on bonuses and increases for senior managers and executives that earn more than R550k ($77,588 – exchange rate per 24 Nov 2010) per annum. They further suggest that people earning less than R20k ($2,821) per month should get increases equal to inflation PLUS a real increase. On the other hand, those that earn more than R20k per month should get increases equal to inflation only.

I have a real problem with this idea. I am not sure how this country calculates its inflation rate, but it seems that it is totally inaccurate based on how much food prices, for instance, have gone up. According to Stats SA, South Africa’s CPI, year-on-year, as of September 2010 is 3.2%, and according to TimesLive, inflation stands at 3.5%. There is no way that the cost of living in South Africa increases year-on-year at only 3.5%! When I look at the annual increases of food stuffs, not to speak of the price increases of Eskom power, I just cannot believe the 3.5% story. What do they use to calculate this number?

A problem with government controlling salaries, and who gets what type of increases, is that it is a strong leaning towards a communistic savingsbrokenmodel of control of the populace. When government starts telling businesses what they may or may not give their employees, we will soon see a country where everyone is seen as ordinary, brought down to the same level, and people will soon lose their drive for productivity and excellence. The idea of government to control increases across the board is a major hurdle of productivity. It creates an environment of mediocrity. At my previous company, in all the years I worked there, we never saw any increases for 3 years. No matter how great the managers are or the environment, in the end you have to start talking money. I cannot make a living on the idea that I have a nice boss. In the end, inflation and life increases catch up to you, and you start suffering. In the end, I had to start using my credit card (way too much), because we just could not make it every month on the budget we had. The problem is that when people do not get sufficient increases, they cannot save, and that is a problem for the government too!

It is true, that when the people have the capability to put money away for a rainy day, in preparation for their old age, it shows that the economy of the country is also healthy. When people consistently have to live off credit, then we will have what the world has experienced with the economic downturn since around 2007. People were forced to live beyond their means, and that cannot be maintained! Now, if the ANC government persists in this direction, more and more South Africans will no longer have the ability to save money, and the repercussions for that scenario is simply too dark to consider. If people cannot save, it would mean that banks will become unsustainable, and if banks are unsustainable, they will have to get their money from somewhere to make their businesses viable. Bank charges will go through the roof in order to allow for their survival. As a result, people will have even less money to live on.

emptypocketsFurther, if people have less and less money every year in their salaries, the government tax coffers will see less taxes every year in percentage terms. Soon the government will not have enough money to pay for all those bogus projects that they waste all our money on. Next you know, taxes will be raised! It is inevitable. If the people have less money, taxes are less, so taxes must be raised to meet the needs of running the country.

Also, high earning citizens are the ones that provide jobs for low income earners such as domestics, gardeners, house painters and many more of the same. If the government starts curbing the increases of high income earners, low income earners will eventually sit without jobs. Inflation will eventually catch up to this situation, and an economy will be destroyed. Economies can only prosper if people are rewarded for productivity and creativity.

If this is the best government money can buy,
I want a REFUND!

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