Abstract
M.Comm.
Economic growth is the key to wealth creation and competitiveness. The
purpose is to improve the welfare of society and upgrade the standard of
living of all citizens. The most important element to any nation seeking
growth and stability is economic growth - and the key to this is a high level
of productivity. Sustained growth transforms the lives of poor people. It
makes higher output and income possible, which raises the productivity of
their work.
However, South Africa's productivity record is disappointing and has fallen
behind that of its main trading partners. Productivity growth has slowed
down since 1970 and is poor compared to world standards. This
contributes to the poor economic growth and a decline in competitiveness.
Despite strong capital investment, productivity growth in South Africa has
been weak and even negative for a long time. South Africa's lack of
economic growth is further accentuated by high unemployment, labour
unrest and high goverment expenditure.
South Africa, competing with developing countries like Argentina, Brazil,
Chile, Greece and Mexico has lagged behind these countries in terms of
economic growth. Real incomes rose steadily in the 1960's, but dropped
during the 1980's. South Africa was also the only country where output
per person was lower (8%) in 1994 than in 1970. The next worst
performer, Argentina, reported output per person of 13% higher in 1994
than in 1970. Brazil performed the best with over 80% higher output in
1994.
The challenge facing the Goverment of National Unity is sustained
productivity-growth. Firstly, the economy must grow faster to provide the
basis for human development in the long run. Secondly, growth must
benefit everybody. The economy must be stimulated to increase job
creation to help alleviate poverty.
In an attempt to stimulate the local economy and focus on productivity
growth, incentive-based schemes are more widely being used to increase
productivity. The use of incentives and "gainsharing" is recognised by
management as an effective and one of a few successful methods to help
raise productivity levels. In the process, a "win-win" solution is created.
Ultimately, productivity gains translate into benefits for all the
stakeholders.
The aim of this study is thus to investigate the problems regarding
productivity, methods of improving productivity in general with the
emphasis on incentive schemes and "gainsharing" with a specific focus on
the insurance industry in South Africa.
The study begins with a thorough literature study regarding productivity,
productivity improvement techniques and incentives to increase
productivity. Following this is an imperical study to investigate certain
specific factors which influence productivity, and methods to improve
productivity through incentive schemes.