01 GE PE - PESt
There are some parts of the politics would impact the corporation’s developments to some extent, for example tax policies, fiscal policy, and trade tariffs and so on. According to the report “Key tax changes” described changing of the tax of employment, carbon tax, and income tax in South Africa. These policies would impact on GE power corporation.
The firstly, employment tax incentive, which is good for employees of GE. If an employer is eligible to receive the employment tax incentive in respect of a qualifying employee, the employer may reduce its employees’ tax payable. The policy would urge the staffs to work hardly, thus improve the output and productivity of GE.
Secondly, reforming in the Carbon Tax, which also an important element that influences the GE company. GE Power have some different kinds of industries, such as greenhouse, mining, oil and gas industry, and steel industry. The Carbon tax is proposing that the tax rate of a R120 per tonne of carbon dioxide be raised at a rate of 10% per year until the end of 2019 to provide a clear long-term price signal. In the process of producing power of GE, the CO2 would be also generated. Therefore, the tax reform is worth to notice.
In addition to policies, the economy elements also have impact on the GE power in Africa, for example growth rate, interest rate, level of employment, stability of price and currency exchange rate. In the article “African lions: Demographic, Employment, and wage trends”. It described that after negative and slow growth in the late 1980s and early 1990s, South Africa’s economy begin to growth steady. This growth was supported by strong macroeconomic management and effective institutions. In the five years, immediately after democracy, the economy keeps increasing. The period of fastest economic growth of Africa was between 2004 and 2008, but the growth was interrupted by the global financial crisis, which caused the South African economy to enter a brief recession in 2009 (2016). The recession of the economy has detrimental effects on the GE Company, where consumer and business demand was decreasing, and competition from the same category company of other countries were increases. Haroon Bhorat & Kavisha Pillay (2016) described that national output subsequently rose to just over present in 2012. But the weakening of the South African economy can ultimately be attributed to slow the global growth. In that time the currency exchange rate would be lower with the recession of the economy, when the currency is weak, it made much money to buy one dollar or euro, it is bad or GE company’s export and import.
The poverty rate also has effects on the GE company. According to the article " African Lions: Demographic, Employment, and wage trends” it illustrated in 2000, South Africa’s real GDP per capital currently at $5,916, up from $4,652. The uneven and at times sluggish growth in average income levels, however, has meant a moderate decline in poverty. And the poverty headcount ratio has increased from 31 percent in 1995 to a current of 53,8 percent, which had undoubtedly remained high. South Africa was inability translate growth into reducing poverty due to the society and income unequal (2016). The lower economic growth rate and a higher poverty rate increased the unemployment rate. In the recession economy, unemployment rises, more people search for employment, skilled human capital is abundant and wages usually fall. The skilled human scarce would especially have detrimental effects on the GE company’s high-end sectors.