While burgeoning legislation and government red tape are crushing entrepreneurial drive in the UK, in South Africa, entrepreneurship is increasing significantly and new businesses are boosting employment.
"South Africans also face huge amounts of red tape, but they`re starting new businesses anyway, and this is creating opportunities for specialist software developers to provide solutions that reduce the burden on management," says Stephen Corrigan, managing director of payroll software developer, Softline Pastel Payroll.
"No less than five payroll Acts of Parliament directly affect the administration of the company payroll function alone, not to mention the plethora of rules and conditions that affect employment, disciplinary procedures, taxation, licensing, safety, health, environment and quality, to name but a few."
According to Corrigan, international business and financial software organisation Sage, which owns the Softline group in South Africa, recently conducted a survey representative of the views of 3 700 business decision-makers in the UK. Forty-two percent of them said they would not start up in business again because of government red tape, while 34% see red tape as a barrier to innovation.
"In South Africa there are 1.9 million registered companies, of which it is estimated that some 1.5 million fall into the SME category. With all of the legislative red tape to overcome, it is surprising that only about 4% of these companies are using automated payroll software, which ensures the legislative requirements are met."
Corrigan adds that an interesting aspect of the Sage UK survey was that young companies (less than five years old) were more optimistic than older companies, with just 24% believing there is too much red tape compared to 57% of older companies (more than 20 years).
"Perhaps the younger companies are more inclined to use technology to overcome the legislative difficulties they face. Certainly our approach is to work with SME businesses on the basis that everything we do aims to save them time and money with payroll solutions that automate the processes and deal with legislative requirements.
"This frees them to focus on the business rather than allocating time, money and effort in manually achieving employment and tax compliance."
Statistics from the fifth UASA SA Employment Report show that 240 000 new jobs were created in the South African formal sector in 2006, a 2.7% increase on the previous year. The report also revealed that one out of every six people is self-employed. The 1.9 million businesses now registered with the Companies and Intellectual Property Registration Office compares with just 800 000 eight years ago.
The current minefield of legislation means that businesses simply have to get their payroll right, on time, every time. "If not, the consequences for a business can be severe," says Corrigan.
"As a result, perceptions that an automated payroll was only a necessity for larger SME companies have begun to change significantly."
Share