Programme director
The Mayor of Ethekwini municipality, Councillor Obed Mlaba
The Premier of the province of KwaZulu-Natal, Dr ZL Mkhize
The Minister of Economic Development, Mr E Patel
Members of the Executive Council of KwaZulu-Natal
The President of Congress of South African Trade Union, Mr S Dlamini
The president of Business Unity South Africa
Business leaders
Leaders of labour union formations
Academics, economists and analysts
Senior government officials
Esteemed delegates
All protocol observed.
We wish to express our sincere gratitude to our partners as government, particularly the labour and business formations, civil society and academics for honouring our invitation to this important summit which aims to deal with the challenges afflicting our economy.
We have no doubt that tomorrow afternoon, when we conclude this summit, the darkness that hovers around the economy of our province, our country and indeed the whole world would have been replaced by a shining glimmer of hope. We hope for this new dawn precisely because we have faith in the collective wisdom and experience of all the delegates attending this summit to turn around the fortunes of the economy of our province.
In different epochs in the history of mankind, fate decides that a particular generation must be the torchbearers that lead the way for future generations. Unfortunately, in some instances, those who have been chosen by a congruence of coincidences to lead their communities and nations out of the mire of backwardness and into the future filled with prosperity and advancement, do not live up to this expectation. History is brutally unkind to such generations. However, we have no doubt that the women and men gathered here for the next two days, bound by a common objective to build a bright future from the debris of the global economic contraction, will, long after they are gone, be remembered for the decisive action that they will take at this summit to build a KwaZulu-Natal and a South Africa worthy of our children.
In a rare deviation from preaching the virtues of accumulative capitalism, economist Adam Smith once said: “To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature” Unfortunately, programme director, human beings are imperfect. Precisely because of the excesses perpetuated elsewhere in the world, coupled with greed and crass materialism, the world finds itself in the deepest downturn in the global economy since the Second World War.
This downturn is exceptionally well synchronised with most of the advanced economies in recession and the rest of the world economy having suddenly screeched to a grinding halt. Consequently global trade and financial flows are shrinking fast while output and employment losses are mounting. Although there are signs emerging that the downturn may be in the process of bottoming out, uncertainties about the future progression of the world economy remain high.
Owing to the interconnectedness of the world, it was inevitable that the province of KwaZulu-Natal in particular and South Africa in general were not going to escape the adverse effects of this biggest economic slump in decades. While many of us had hoped that the ripple effects of this global contraction was going to minimal on our country owing to the measures that we had put in place, our worst fears were confirmed after it emerged this year that the country had slipped into the negative growth territory for the first time in years and was officially in recession. Not too long ago, the Statistic South
Africa released figures which showed that KwaZulu-Natal had been hardest hit by the recession with 117 000 jobs having been lost in the first quarter of 2009. Just last week, the labour force survey revealed that in the second quarter KwaZulu-Natal had lost 57 000 jobs and was the third hardest hit province after Gauteng and Western Cape which lost 77 000 and 67 000 jobs respectively.
However, what is heartening about these figures is that the manufacturing sector, which was one of the sectors which were hardest hit in terms of shedding jobs during the first quarter and which is the largest sector in KwaZulu-Natal both in terms of the contribution to the gross domestic product (GDP) and employment, has increased employment during the second quarter from 389 000 to 415 000. This means that 26 000 more people have been employed in the manufacturing sector in the province in the second quarter.
Equally, what is revealing about these figures, programme director is that the decline in the unemployment rates is attributed to an increase in the number of discouraged work seekers which has increased from 271 000 to 448 000 in the province. This means that the situation is getting worse instead of improving. This also means that many of our people have simply given up hope and have stopped looking for work. We also note that the sectors that had significantly contributed into the highest numbers of people losing jobs, have somewhat changed.
Programme director in a grim situation like this when thousands of our people have been relegated to the outer fringes of the economic activity in our society owing to factors that are beyond their control, it is tempting to wallow in despondency and to lose hope. However, ours has never been a people who throw their hands in desolation in the face of challenges.
Programme director, at a time when the nations of the world are faced with a spectre of doom, we need to hold our own, and truly believe that no challenge is beyond conquer. We need leaders whose depth of vision is endless. We need the collective wisdom of a nation that can distinguish between ordinary times and extraordinary times. We need intellectuals and scholars that are steeped in the know how of what works from that which cannot work. We need the business community that can see far beyond the confines of ever increasing profit is at stake.
Equally, we need a labour movement that understands that the future of its members is dependant on the choices and sacrifices that they make today and not some other time, to build that brighter future for their members as well as for society at large. We need the nations that know what transcends their boundaries for the common cause of humanity.
The depth of our vision should be the one that propels us to see far ahead and to model our responses to the current challenges, on the basis of a collective sustainable growth. We therefore say to all our social partners, that where others may see the severe drought in front of them, we need to see the opportunities that are waiting to be tapped. Where others may see a disaster that is befalling them, we need to see an ocean of opportunities that need to be converted to build a new prosperous nation.
It is for this reason that we have called this summit. We believe that this summit should be a confluence of ideas and help us to forge a common approach to this economic crisis that is informed by the understanding that the future of all of us as labour, civil society and business in inextricably linked. While our interests might at times be inherently opposed, however they converge at a particular point. The reality, programme director, is that the current global economic climate can only be tackled successfully if we all work in concert, understanding that it is our collective fate as a nation and as a province that is threatened by this biggest economic storm of our age.
Programme director, given the intensity of this crisis facing our province and our country, it is obvious that a mere knee jerk response to the crisis will not extricate our province from the morass of this economic turbulence. The reality programme director is that the prevailing economic crisis has led to a considerable fall in demand across the private and public sector. While production capacity is abundant, a shortage of effective demand has resulted in rising unemployment, company bankruptcies, reduction in income and hence falling revenues. What is heartening is that there is consensus from all our social partners and all levels of government that a response has to be decisive, coordinated and coherent. It should be a response that is rooted in the understanding that short term diagnoses can only go so far in cauterising the financial wound.
Paradoxically, this crisis has given us an opportunity to mould a common economic future that takes into account the interests of all our social partners. It is because of this reason that we believe that we are on the cusp of writing a new economic script for our province that is inclusive and that will enjoy the blessing of all our social partners.
This summit must be the proverbial totem of what can be achieved when all social partners work together for the common good of their province and their country. From our side as government, we intend to do what is within our power, within the broader national framework, to help strengthen provincial productive capacities for success. In particular, we want to use our infrastructural investment as leverage for economic growth. Through the investment of public funding into infrastructure this can begin a push-pull strategy wherein private sector is drawn to areas where they may not have been active previously.
This conference, particularly from the perspective of local government, must also consider a resolution around softening the blow for those businesses that are facing difficulties by exploring the concept of tax breaks for these companies around administered government prices for such services as water, electricity and rates. Obviously, a targeted approach will have to be considered for these tax breaks which will be time bound and would be subject to review by municipalities. Likewise, mechanisms must be developed for such companies to report to municipalities on their status.
Government should, as part of consideration of resolutions for this summit, explore the need to urgently desegregate tariff lines and set new tariff lines for some of our heavily vulnerable sectors. Our strategy should be to grow these sectors and provide them with the necessary cushion to make them competitive
We must also consider imposing targeted import duties on certain goods and products where producers of those imported goods may have been subsidized by their governments in their country of origin. This may be our response to an uncompetitive behaviour in the case of goods that flood the market.
Programme director, as government we are fully aware that the labour faces the toughest time in periods of recession because continued job losses creates not only social and economic hardships but also it leads to psychological and emotional stress. We therefore believe that the unions have to work more closely with the management in tough economic times. Creating a joint objective of keeping business operations afloat is a good start. Once this has been achieved it is important that both parties must work hard to reduce counter productive stand offs in order to keep confidence alive. It is also important to keep proactive engagement among workers and business management so as to avoid uncertainty.
Of primary importance, we believe that both parties must work hard to avoid job losses by coming up with arrangements such as short working days, half working days, unpaid leave, extended education and training leave, among others. In the same vein, we expect labour to be considerate in its decisions and actions and, therefore, to be a partner for growth and ensure that they carefully assess all actions that maybe critical to getting the economy out of the recession quicker than it would, otherwise, have been the case.
We expect business to come up with innovative and practical measures that would ensure business efficiency and sustainability of business operations. These should, among other things, deal with cost-cutting measures that would take away the unnecessarily huge operational costs such as the payment of huge bonuses and any other measures whose aim is to save money and not have business as usual.
Programme director, we also believe that in order for this partnership to work it should be a process of give and take. Therefore, much like labour, the business community has a responsibility to open the avenues of communication and constantly inform the workers if a company is facing economic difficulties. The effect of the economic situation becomes more bearable to the workers when they had been kept abreast during all attempts to rescue the company. Programme director, the objective of this summit is to formulate the provincial economic recovery strategy which will protect, retain, enhance and grow the critical sectors of our economy. We will do so in the conviction that no country or region of the world has prospered without a sound and diverse economy and or a vigorous participation in broader value-chains of trans-national economic activity beyond the extraction and export of raw materials.
The road map towards KwaZulu-Natal’s Economic Recovery Summit, must formulate the province’s strategic response to the crisis, a strategy that reflects this pragmatism by tackling regulatory and policy failures comprehensively. The focus is on developing an economic development vision within government and between government and its partners. We want to ensure that our strategic response becomes an outcome of a process of self discovery among development partners.
Key pillars of our strategic response which will be discussed in this conference will be the diversification of manufacturing exports. This requires the promotion of increased value addition per capita characterised particularly by movement into non-traditional tradable goods and services that compete in export markets as well as against imports. Through a collective partnership behind a collective industrial development vision of our province, we will intensify the province’s industrialisation capacity and movement towards a knowledge economy.
This would require that we promote a more labour absorbing industrialisation path with a particular emphasis on tradable labour absorbing goods and services and economic linkages that catalyze employment creation. We believe that this is an important platform for all important stakeholders in the private and the public sector to deal with the third wave of the global financial crisis, which is now hitting the world’s poorest and the most vulnerable, and hitting them hard. We do expect this meeting to confront diverging approaches on how best to soften the blow for the KwaZulu-Natal province.
While all voices will be given equal attention and treatment at this summit, however we are appealing to all social partners to put forward those propositions that would be pragmatic, practical, balanced and possible to implement after the summit. In order to achieve the objective of co-creating a roadmap for KwaZulu-Natal’s economic recovery and a strategy for job retention, we need to apply ourselves diligently to the task at hand. Subjective prejudices that may have characterised the relationships among the partners need to give way to a collective approach to a common challenge that faces all of us.
If we recoil into our laagers and use the next two days for finger pointing rather than coming up with a collective solution to the challenge, then history will judge us harshly. We must aim to pursue others to our point of view but also allow ourselves to be pursued to others’ point of view because no one among the partners can alone come up with an elixir to this ill.
It is our fervent wish that the resolutions should constitute a base from which we will move towards reaching a social accord on the things that we need to do together to have a sustainable growth of our provincial economy. Pointedly, this summit cannot afford to degenerate into an expensive talk shop. In this regard, we suggest that during deliberations, we must look at some of these areas which we think are critical.
Institutional Arrangement and social partnerships
As government, we feel it is our role to bring together all partners to deal with economic on a sustainable and ongoing basis. We believe that a structure dedicated to social dialogue at the provincial level would facilitate this process of cooperative governance. This Summit, therefore, needs to reach consensus on the KwaZulu-Natal Economic Development Advisory Council (KZNEDAC).
Procurement
It is imperative for provincial and local government in partnership with business, to drive and intensify a buy local campaign. In this regard, all of us, whether government or big business, must commit to paying for goods and services provided within 30 days in order to ensure that, in particular, small businesses do not go under because of the long timelines between providing a service and getting paid.
Formulation of industry by industry plan
We need an industry by industry specific response plan. Such a plan needs to identify the critical factors in each industry and therefore put forward coherent response measures that would deal with these matters in each industry.
Establish a permanent Industrial upgrading and modernization facility
The aim is to replace basic, low paid activities with activities that command higher returns. We need to look at process upgrading, product upgrading, functional upgrading as well as chain upgrading in order to enhance our competitive edge
Job retention
Considering that about 117 000 jobs were lost in the first quarter of this year, and that 57 000 jobs were lost in the second quarter of this year, we therefore need to emerge with a deployment for job retention across the board. Parties should join forces in protecting current jobs and creating new ones. Where possible, closures should be averted by considering short times instead of retrenchments.
Skills development
A provincial human resource development programme must be developed whereby the development of skills and the optimal use of resources may be coordinated and integrated. The downtime resulting from reduced demand should be used effectively and seen as an opportunity for enhancing skills in the workforce.
Competitiveness and beneficiation
To boost competitiveness of local small, medium and micro enterprises (SMMEs), government must implement programmes of industrial upgrading and modernisation, business retention and expansion and productivity programmes.
Leveraging corporate social responsibility
Poverty relief programmes should be extended to retrenched workers in order to cushion them against the negative effects of the crisis. This summit should consider the establishment a fund to provide resources towards this end.
Facilitating access to financial support
Information on available financial support for struggling businesses should be made public to ensure that those affected are well informed and those wanting to apply for such funding should be assisted.
Conclusion
Clearly, programme director, we have got our work cut out, but we have no doubt that the women and men who are part of the summit are more than up to the task of dealing with the challenge. The biggest gain we have scored is that we have been able to converge here over the next two days to collectively seek a solution to a pressing social problem. We must therefore build on this momentum to see our task through.
This summit therefore, for all of us gathered here over the next two days, represents a rare chance to change the course of history. The performance of this summit will be measured on the basis of how each social partner has been able to put on the table what they expect the other social partners to do, whilst, at the same time, each social partner takes a very clear responsibility in order for us to get out of this recession.
We, therefore, need a conference where social partners understand that what we need is not polemics and loftiness of their arguments but it must be about this Summit being a decisive moment where all of us will forge, in practice, our collective sustainable growth going forward.
We therefore, urge each and every participating delegate to use this platform not for personal glorification but to remember the millions of the people of this province who were not able to participate at this summit, that their aspirations and hopes are pinned on each and every one of us. The consensus seeking is not an option but it is a virtue that has brought all of us to be here for the next two days. It is only up to us to live up to this challenge of moulding a prosperous world from the debris of the downturn. We dare not fail.
I thank you.
Issued by: Department of Economic Development and Tourism, KwaZulu-Natal Provincial Government
6 August 2009
Source: Department of Economic Development and Tourism, KwaZulu-Natal Provincial Government
(http://www.kznded.gov.za/)
