OTE2601

ASSESSMENT 1-809035
CHAZ ASHLI FOSTER
STUDENT NUMBER: 50445642
Assignment 01
Unique number: 809035

I Chaz Ashli Foster Student number: 50445642 Module code: OTE2601

Declare that:
1. I understand what plagiarism entails and am aware of the University’s policy in this
regard.
2. I declare that this assessment is my own, original work. Where I used someone
else’s work, whether a printed source, the internet or any other source, I give the
proper acknowledgement and include a complete reference list.
3. I did not use another current or previous student’s work, submitting it as my own.
4. I did not allow and will not allow anyone to copy my work with the intention of
submitting it as his or her own work.

Signature ………………………… Date: 02 May 2024

Assignment 1

QUESTION 1

In 2020, the world was devastated and ravaged by the unprecedented Corona

Virus (Covid-19) pandemic. Most businesses closed-down; which resulted in

serious loss of jobs to certain employees whilst some business put employees on

contract or retrenched them.

While conducting an oversight visit in Port Elizabeth on Thursday, honourable

President Cyril Matamela Ramaphosa; noted that while the lockdown had

managed to flatten the virus’ curve, the focus, going forward, needed to be on

restarting the economy which had suffered greatly under the Disaster

Management Act’s restrictive regulations. President Ramaphosa’s engagement

with NEDLAC on Friday signified the start of a gradual easing process which

was expected to culminate in a district-based move to Level 3 lockdown before

the end of May. Health Minister Zweli Mkhize had, however, warned that

regions which were unable to prove their medical readiness amid burgeoning

caseloads would likely remain exempt from lower-level reprieves.

Prior to that; the rate of unemployment was sky rocketing in South Africa.

Study the figure below.

1.1. In your opinion, what would you consider to be the results of

unemployment in any country (15)

The results that unemployment has on any country will always be negative. I will
discuss what I consider to be the effects of unemployment.
One of the main results of unemployment is poverty, we see that in communities
where the rates of unemployment are high, the living standard of people is
significantly lowered. Basic needs are not able to be met and are are further left
unaddressed as social grants ( if they are available in the country) are not able to
sustain even a very modest lifestyle.
This then decreases the standard of living for the population, because they have to
now get used to paying more for less.The population needs to make tough decisions
on what they are consuming and what they are going to do without. People are not
able to maintain themselves personally, home maintenance cannot be afforded and
so people and infrastructure become run down with residential areas turning into a
slum.
Unemployment can also be detrimental to ones mental health. Individuals that find
themselves in this situation usually experience tensions on a familial level especially
when they were a breadwinner and either lose their job or no longer able to work for
whatever reason. We tend to judge those that are unemployed and class them as
lazy and this does nothing to aid an already helpless situation. Individuals may find
themselves socially isolating due to fear of judgement as well as being self
conscious about not being able to afford certain things. It can lead to depression and
even worse self harm.
The more desperate these individuals become, they are driven to acts that are
outside of their character like petty crimes and other things that seem untoward. The
poverty that is so rife in a lot of communities increases the rate of crime in more
affluent areas as the people need to eat but are not being offered opportunities as
there either are no opportunities or they do not have the necessary skills to do what
is available. In these circumstances the economy cannot grow because the cycle of
poverty is one that is extremely difficult to escape. Nobody is being employed,trained
or up-skilled and therefore goods and services are imported into countries creating a
deficit and no growth.
These are a few areas which I consider to be the results of unemployment.
1.2 Causes of unemployment (15)

As we previously discussed, the results of unemployment on a country can be very

detrimental to the country. I will now discuss what causes unemployment.
From my personal perspective the cause of unemployment begin at a fundamental
level, with education and the level of training students are equipped with. In a South
African context we can see that there are many issues arising in students as early as
primary school level, our education system is designed just to promote students
through the grades and we see that as they progress the learning problems become
more vast. The reading level remains low and concepts are not able to be grasped
as teachers are stretched in their capacity having so many kids in classrooms and
not being able to individualize attention for potential to be realized. They leave
school with no desire to continue learning or are unable to get into further education
due to poverty - which as I previously mentioned is a cycle that is so hard to
breakaway from. This causes the youth not to have gainful employment because
there is a lack of skills and training for most individuals.
Corruption and nepotism are also key factors working against employment.
Individuals that are higher up in companies and organizations a lot of the time hire
family and friends for positions which they are not really well suited to, or,they
advertise vacant posts whilst they have already pinpointed the person they’re going
to hire meaning that although there are vacancies they are not able to be filled by the
general public. Some individuals also take bribes for jobs and tenders and so even
though there are some people who have what it takes to fulfill the role, they are left
disadvantaged by such factors.
Another cause of unemployment is that in terms of geography, there is a scarecity of
jobs or rather lucrative jobs in the inland or rural areas. When jobs are only available
in certain areas it makes it difficult for individuals to make provision for travel to and
from work, they must either uproot at a massive cost or pay for travel that can be
more than what they earn, it is not worth it to do this and so people rather remain
unemployed until they find closer opportunities.
Lastly as the demand for certain goods and services decreases due to automation
and other factors, employers cannot keep up with staff salaries and contracts get
terminated.
1.3 Solutions to unemployment (15)

In my opinion, unemployment cannot ever fully be eradicated, however, I will share

a few of my solutions to the current crisis around unemployment.

We need to start first with the education system, to help students realise their
dreams and that there is a need for further education. It is imperative that teachers
guide their students as they go on in their schooling careers by showing them their
options. By highlighting areas where skills are needed and by being hands on with
students about they can further their studies (bursaries and scholarships) and
encouraging them to work hard towards this we can cause a huge shift in the lack of
employment because there will be a workforce with more skills at a fundamental
level.

A large part of unemployment is also due to an increase in population. As the

population grows, the economy struggles to keep up with the needs of its people. If
governments impose stricter laws on immigration more especially in areas where we
see an influx of illegal immigrants there might be some relief to the strained budget
of countries, because as much as people enter countries legally there is also a large
number of people who do not. In many cases people who come into countries
illegally also offer their services at a lower rate and undercut minimum wage laws.
This practice needs to be seriously considered and in order to lessen the rate of
unemployment there must be more rigidity at a governmental level.
We also need to start teaching our youth about other avenues of making a living. I
think that we need to create more awareness around agriculture and livestock
farming so that there is more sustainability for communities to begin to stand on their
own. This can also be something that grows the economy in a massive way as there
will be more exporting of local produce rather than having to import goods that are
sold to consumers at exorbitant rates.
Unemployment really needs to be tackled systematically in order for us to win the
fight, the above mentioned solutions are a good start.
1.4 The role of Trade Unions in the economy of a country (15) [60]

Trade Unions play a significant role in the economy of a country for a few reasons, I
will be discussing a few of the reasons why.
Trade Unions are first and foremost are a protective barrier between employers and
employees. When workers are under a trade union, they can rest assured, should
there be any disputes which can include unfair dismissal, labour disputes and any
workplace injuries be without fear of unfair or unjust action. Workers are happier in
their roles knowing this and are able to perform to the best of their abilities which
adds to the overall turnover of the company or organization, which in turn adds to the
economy of the country.
Workers who are under a trade union are well represented members of the work
force, the trade unions ensure that their members have the best possible working
conditions, and that their compensation and benefits match their skills and
experience. The union executives ensure that through constant negotiation and firm
agreements, workers remain in their roles knowing that their overall well being is
considered at all times.
By constantly negotiating and advocating for better pay and conditions the trade
unions add to socioeconomic development of their workers. The standard of living
increases for these workers and their pay is always aligned with industry standards
and inflation which means that the workers never struggle in a tough economic
climate.
Trade unions may have some drawbacks but overall they have a more positive
impact on the economy of a country.
QUESTION 2

Presidents Nelson Rolihlahla Mandela once said: “In this world nothing

can be said to be certain but death and taxes.” This is one of the most

popular economic quotations of all time. This quotation is so widely used

because it is so true. Tax is unavoidable. Taxation is the way in which the

government of a country, gets the income it needs to provide services to

the people of the country. Taxation is a very complex subject with

thousands of laws and regulations.

2.1 Distinguish between direct and indirect taxation. How does the

country benefit from them? (10)

Direct taxation is tax that is directly applied to individuals and businesses. This
tax is incurred and paid for by either the individual or business and includes
personal income or corporate tax. Direct tax is extremely beneficial to a
country as these taxes are paid directly to the government. The value of the
tax is in line with the profits or earnings of either the individual or business.
Indirect tax is a tax incurred on goods and services, unlike direct tax, these
can be imposed on other entities or individuals. Indirect tax includes such
taxes as value added tax and excise duty. Consumers are usually not aware
of these taxes as they are usually hidden by being included in the total price of
the goods or services that were purchased.Indirect taxes pose a challenge to
lower income groups who cannot keep up with the cost of living as the rate of
inflation increases incrementally by far too many percent year on year.
One of the implications of both of these taxes is that they are both generators
of revenue for a countries government and fund public services and the
maintenance and development of infrastructure.
For the taxes to add to the equity of a country direct taxes should be applied
proportional to any earnings from an individual or business and indirect taxes
must mitigate the same challenge so as to lessen the impact on lower income
groups. Taxes can also have a positive impact on the social aspect of a
country, when higher taxes are attached to items such as alcohol or cigarettes
there will be less of a need to allocate resources for these industries driving a
lower rate of alcoholism as it is too expensive to purchase and reducing
illness related to smoking. Direct and indirect taxes mostly impact a countries
economy and when the tax system is one that is fair, the residents of a
country have no choice but to abide by this because they can see that there is
a benefit to paying them and remaining compliant.
2.2 Stokvels have been around for a long time now and they are uniquely South

African. The term “stokvel” dates back to the 19th century when English

settlers described their auctions as “stock fairs”. The illiterate ones referred to it

as Stokvel instead of “stock fairs”. During these fairs, farmers and labourers

would sometimes pitch in together to purchase livestock. Elaborate on the role

of each of the following types of stokvel;

2.2.1 Grocery (3)

Grocery stokvels play a great role in enriching the lives of their members.
They help them to collectively save towards acquiring groceries usually in bulk
and over the Christmas/ Back to school period when budgets are already
strained. Grocery stokvels also have a hand in promoting unity among
members of the stokvel and the greater community fostering support during
hardships.

2.2.2 Basic (3)

A basic stokvel is the firstly a great way to start learning how to save ones
money, by having more than one member there is a certain level of
accountability that is adopted by individuals to ensure all members contribute
timeously and that all savings are handled accurately. It gives the average
person access to savings in times of financial hardship.

2.2.3 Funeral cover (3)

The main purpose of a funeral cover stokvel is to provide financial cover

towards the costs of burying a loved one. Members become responsible for
their savings because this sort of stokvel only pays out in the event of a death
of a loved one covered under this stokvel. The grieving family can be
comforted knowing their loved one receives a dignified burial and lessens the
burden on the surviving family and friends.

2.2.4 Property (3)

Property stokvels are fantastic investments into an individuals financial future,

this sort of stokvel usually requires a higher input initially but the gains from
such a stokvel are never ending and once a property is purchased and
earning revenue by way of rental or venue hire the individual can acquire
other properties by using their gains to fund them.

2.2.5 Investment (3)

Like a property stokvel an investment stokvel plays a role in helping members

receive divends from payouts related to their investments, the members of
these stokvels can better plan their finances and big purchases around these
payouts, meaning there is no credit being used and no debt being created. In
the event of an emergency members can withdraw from their investment to
navigate their challenge and not have to worry about using budgeted income
for this.
2.3 Money

When you are penniless, you do not have friends but when you are rich you have

a lot of friends. Money is therefore the means whereby human needs are

satisfied.It is also known as a means of payment. It is used daily in buying and

selling transactions, circulates continuously and facilitates trade. Money can be

called or viewed by various concepts or names determined by the place where it

is used. Elaborate on any five concepts or names associated with money

depending on where it is used (15) [40] [100]

Money is a medium of exchange that facilitates the payment for goods or services.
Simply put when you give someone money for goods like paying for a loaf of bread
or for maintenance on your home you have exchanged the legal tender or money for
the goods or services.
It is also a unit of measurement in that each country carries its own currency and so
it is a commonly used measurement for the value of goods and services. It allows a
consumer to do comparisons between products and services and to know instantly
the value attached to it.
Money can also be used as a store of value depending on how stable the economy
of that country is. The value of the stored or saved money can fluctuate however it
gives people the opportunity to store money gained by selling goods and provision of
services which they can exchange for other goods and services in future.
We also use money as a standard for deferred payment. Businesses and individuals
alike can enter into contractual agreements with other entities to pay off or pay later
for goods or services. As the standard for deferred payment one will be able to pay
off debt and other obligations after they have already been received.
Lastly, money is a way for wealth to be transferred from one to another. It is
therefore a medium of wealth transfer. An example of this is when someone
purchases your home from you and transfers money into your bank account to the
value of the property.