the National Union of Metal Workers of South Africa (Numsa) Job Security
Conference
14 March 2009.
Programme director
President of the National Union of Metal Workers of South Africa (Numsa)
General Secretary of Numsa
National Executive Committee members
Ministers and government officials here present
Leaders of the employer organisations here present
Distinguished guest
Comrades and friends
Ladies and gentlemen
It is indeed an honour for me to have been invited to address this all
important Job Security Conference and I would like to thank the National
Executive of the National Union of Metal Workers of South Africa (Numsa) for
affording me the privilege to participate in this important assembly.
This conference happens at the time when all concerned citizens are
grappling with global challenges of immense proportions. The gravity of the
current challenges demand strong leadership from key players in our economy and
the responses we seek should not only be about "the here and now" but should be
geared towards shaping the future we all seek to build.
Secondly, your conference is precisely what the recently adopted framework
for South Africa's response to the international economic crisis called on all
of us to do, develop sector specific strategies and concrete action plans to
respond to the global economic melt down.
It pleases me immensely that workers are taking bold steps in the manner
that you are doing in this conference to find sustainable responses to the
global challenges, most of which are not of our making. The current global
economic crisis started as a financial problem in the developed countries.
But due to globalisation and the disproportional economic power relations,
the impact of the financial crisis in the United States of America (USA) and
European countries spread to the rest of the world. However, the effects differ
from country to country.
For African countries in particular, the economic crisis just compounded the
negative effects of the food and fuel crisis that manifested itself earlier in
2008. With limited resources, the crisis just puts more pressure on governments
and their social partners in developing countries to tighten their belts in
ensuring that the poor and the vulnerable do not end up absorbing the shocks of
the economic crisis alone.
Like other African economies South Africa has not been immune from the
impact of this global economic crisis. It now desperately needs a better
strategy to mitigate contagion from the global financial crisis and its adverse
impact on the real economy.
There are various approaches taken by governments in responding to the
financial crisis, from stimulating private sector activity to community driven
projects and reallocating funds to better targeted social programmes. In our
case, the Presidential Economic Joint Working Group prepared a framework for
responding to the crisis.
The thrust of our response framework revolves around strategies to cushion
the impact of the crisis on job losses, particularly for the poor and the
vulnerable. The vicious cycle of this impact on investment (both private and
public), on jobs and on government's social programmes is what our response
framework sought to offset.
The recent statistics released by Statistics South Africa show a decline in
the output by 1,8% during the fourth quarter of 2008. To support these findings
the Unemployment Insurance Fund recorded about 32 517 employment termination
claims as a result of end of contract, followed by 9 644 retrenchments in the
last quarter of 2008.
In particular, the manufacturing industry terminated about 11 809 jobs. This
calls for an intensive strategy as outlined in the framework of response, to
target sectors that are vulnerable to the current economic crisis. The
manufacturing sector is a significant contributor to the country's balance
sheet and it holds real potential to make a huge impact towards dealing with
the economic, social and developmental challenges confronting us.
We therefore need to ensure that the negative impact of the slowdown on the
poor and the most vulnerable is mitigated. The measures we seek to put in place
should embrace elements that promote economic growth and sustainable
businesses, assist and protect workers and the vulnerable and help our country
meet its developmental objectives.
The current global economic downturn is hurting and signalling a deepening
malaise in most of the countries in the world. Among others, the USA, the
United Kingdom (UK), China, Canada and Europe as a whole have exhibited
disturbing signs of responding an uncoordinated manner to the effects of this
crisis.
These signals are very alarming to most world leaders and countries need to
develop strategies that could alleviate the pains and rescue the global
economy. In responding to the crisis, governments are adopting a range of
measures to stabilise their respective economies, but these responses vary
according to the extent of the impact of the crisis.
The advanced economies in which the financial crisis has its origin have had
to try and inject some solvency and liquidity into their banking systems, while
at the same time trying to restore some sense of consumer and business
confidence.
Initially, it was hoped that recessions in developed countries would not be
protracted and that 'decoupling' would enable emerging economies to weather the
global storm.
Unfortunately, increased risk aversion by investors, the limited
availability of credit for investment and trade and reduced global demand for
products mean that developing countries must expect further negative spill over
into their economies.
The depth and breadth of the financial economic crisis should not be
underestimated in terms of the impact on most economies and in terms of the
likely time it will take to make a full recovery. Economic growth will be much
lower, demand will be under pressure, commodity prices have already fallen
(hitting exports), access to credit has almost dried up in the short-term and
the cost of money has risen substantially.
Like other developing countries which are strongly integrated into the world
economy and significantly dependent on its good health, South Africa has been
affected by the sharp fall in demand for its export products and the fall in
prices of key export commodities.
The result is that our growth expectations had to be sharply revised,
downwards.
The duration and depth of the downturn cannot be forecast with certainty, but
growth is likely to be lower than previously expected at least in 2009, and
2010. This has serious implications for incomes, employment, and investment and
on social programmes partly through the decline of tax revenues for
government.
As you know in December 2008 we convened an extra-ordinary meeting of the
Presidential Economic Joint Working Group, to consider how South Africans
should respond collectively to the global economic crisis that has, since
September 2008, seriously impacted on growth and social cohesion in a number of
countries and which has started to affect employment and growth prospects in
South Africa.
We all agreed that the economic situation required an effective collective
response and accordingly agreed to set up a task team under the auspices of the
Presidency and Nedlac to develop a response package for South Africa. We all
agreed that we need social solidarity between all South Africans to ensure that
the crisis does not damage the fabric of our society. Those with greater means
have a responsibility to those without such means.
Our collective responsibility is to work together to withstand the crisis
and ensure that the poor and the most vulnerable are protected as far as
possible from its impact. We must also ensure that the economy is ready to take
advantage of the next upturn and that the benefits of such growth are shared by
all our people.
The Framework for South Africa's response to the International economic
crisis which was adopted by all stakeholders at the Presidential Economic Joint
Working Group held on 19 February 2009, in Cape Town identified five key
principles that should underpin the country's response to the crisis,
namely:
The potential of economic shocks to destabilise the welfare of the
vulnerable, including their jobs, health and education, and to increase
inequality and poverty, is widely recognised, is our first concern and will
require active steps to ensure these outcomes are avoided.
To ensure that all of our activities that are aimed at strengthening the
capacity of the economy to grow and create decent jobs in the future, are
protected and supported as far as possible. Maintaining the planned high levels
of investment in public sector infrastructure and to encourage the private
sector to maintain and improve wherever possible their levels of fixed direct
investment and continue with corporate social investment programmes.
Interventions must be timely, tailored and targeted as is appropriate. Bold
intervention in the form of a broad stimulus package, as signalled in the
recent budget that has economic and social components. South Africa has
developed a diversified manufacturing base that has shown its resilience and
potential to compete with the best in the global economy.
The manufacturing sector provides an important platform for stimulating the
growth of other activities, such as services, and achieving specific outcomes,
such as employment creation and economic empowerment. Manufacturing presents an
opportunity to significantly accelerate the country's growth and
development.
It is important to point out that the sector has not escaped the negative
impact of the current global economic meltdown. For example, all sectors of the
South African automotive industry retail, component manufacturers and vehicle
manufacturers are experiencing a severe and unprecedented cash flow,
profitability, viability crisis, the decline in volume production with negative
implications on employment in the component and vehicle manufacturing
industries.
Already, the major vehicle producers are operating on a four day working
week reportedly to avoid large scale retrenchments. The decline in production
will also compromise the continued viability of an increasing number of
component companies. As a result over 150 dealers close their doors resulting
in over 7 000 direct jobs being lost.
In addition some 200 used vehicle dealers have ceased operations over the
past year resulting in a further 1 900 direct jobs being lost. In addition,
actual employment losses during 2008 in the component, auto parts sector
(particularly during the forth quarter of last year) totalled over 10 000 jobs,
whilst the headcount reduction for 2008 at the vehicle manufacturing plants
amounted to just over 1 100 jobs.
In the face of all these negative developments, the need for a united
national approach underlined by a cohesive vision cannot be overemphasised.
Accordingly, the South African automotive industry is a good example of what
could be achieved through real partnerships.
The remarkable accomplishment through the Motor Industry Development
Programme (MIDP) has been recognised around the world as one of the most
successful and innovative country strategies to develop automotive
manufacturing and open up a domestic market in the new environment of
globalisation.
While it is imperative to respond to the current crises with a thorough
review of the functioning of the international financial and monetary
mechanisms, a human rights approach will contribute to making solutions more
durable in the medium to long term.
This industry has a solid track record of robust social dialogue and it
pioneered various innovative ideas including industry training models,
three-year wages and working conditions agreement model, the first of its kind
in the South African collective bargaining landscape. Therefore I have no doubt
that the industry as a collective would again join forces and come up with
innovative ideas on how to weather the current storm.
It is therefore, important to put more effort on investment in skills,
sustain the Unemployment Insurance Fund (UIF) and closely examine policies
suggested by experts to alleviate unemployment in South Africa.
Chairperson,
The framework stresses the issue of avoiding job losses through macro
economic, industrial and trade policies. All these policies are considered
pregnant with possibilities to save jobs and to create more jobs in the South
African economy during this economic downturn.
Most importantly, the employment measure of the framework is emphasising
what had been reiterated across other intervention measures, protecting jobs
and where possible creating more jobs. We need to commit to work together to
limit the negative impact of the crisis on South Africa and to turn the crisis
into an opportunity to lay the foundations for decent work, sustainable
livelihoods and strong economic growth.
Decent work is the foundation of the fight against poverty and inequality
and it is agreed its promotion will be the corner-stone of a national response
to the global economic crisis. Decent work embraces both the need for more jobs
and for better quality jobs.
In this regard, working together we can succeed, and together we can do
more. We must approach our discussions with the determination and courage of
those who understand the inner logic of this crisis. Remember that this is a
struggle which is more complex then the one waged against Apartheid and that
demands much more subtle grasp of strategy and tactical awareness. Progress and
success is but given to those who continue to win if back through struggle!
Mobilise and organise all those around you to play a role in saving jobs and
preparing to participate in the efforts to create decent work. I wish you
clarity of purpose and success in your deliberations.
I thank you.
Enquiries:
Thabo Masebe
Cell: 082 410 8087
Issued by: The Presidency
14 March 2009
