Chairperson
Minister
Chairperson of the Portfolio Committee
Honourable members
We need to struggle against forgetting.
We inherited a racially biased structural unemployment with its origin predating the advent of democracy in South Africa.
Honourable members will be surprised to know that as from 1970 to 1995, overall employment of all the so called South African four races grew by 17.6 percent, and importantly, this was less than the population growth. What is more surprising is the fact that during the same period (1970 to 1975), employment of African workers grew by zero (0 percent) percent.
This was the essence and the weakness of the apartheid economy.
It is only after the advent of democracy, during the reign of the ANC government, particularly between 2001 and 2008 that the country experienced a period of rapid growth in employment of 23 percent, which was accompanied by rising incomes. This was the first pro-poor employment growth in 40 years, with rising numbers in African employment.
The period between 2004 and 2007 witnessed an economic growth that was only second to that of the 1960’s.
No one can therefore justifiably question the ANC’s track record in economic management – needless to say that such gains do not predicate an absence of challenges in the economy. And then 2008 and its recession came – everyone knows the story of more than a million jobs that were lost in the economy.
The recession brought in new questions about the management of the economy. We now no longer have a single truth in economic management.
Focussing on a creation of a lean government that only facilitates private sector involvement in economic development is quickly proving not to be enough, in particular for developing economies.
We therefore had to ask ourselves the following questions:
In the world of uncertainties, how do we begin to manage our economy to the best possible result for our people and our country? Should we follow the orthodox principles of the right and/or the left? This is how the New Growth Path (NGP) originated. It is our attempt to deal with the new policy and political space created by the uncertainties of our times.
Chairperson,
Let me deal with what I refer as two myths about the NGP:
1. Firstly, there are those who believe that the five million jobs target is solely going to be created by the public sector. Honourable members this assertion is very far from the truth
The NGP is predicated on both the state and private sector playing a role in addressing the twin problem of unemployment and poverty in our country.
Actually we envisage that the private sector will play a major role in job creation. Government will continue to decisively deal with the impediments that affect our stated ultimate goal: namely, creation of jobs.
That is why we have put social dialogue with all involved including this
Honourable House and all its members, regardless of party political affiliation, as the key constituents and determinants in our slow and challenging route we have chosen.
This, however, does not diminish the role of government as a direct employer, in particular, for the fulfilment of social, health and other services required by the communities.
There is evidence that, of the 157 000 jobs created in the last quarter of 2010, 127 000 were in the community and social services sectors. It is needless to explain the aggregate demand impact in the economy created by such jobs.
This means that the public sector went out of its way and invested in job creation, thus mitigating the job losses arising out of the recession. In the meantime, gross savings by the corporate sector as a percentage of Gross Domestic Products (GDPs) rose from 14.7 percent in 2009, to 17.5 percent in 2010.The result thereof is that fewer jobs were created in the private sector as a result of low investment.
We, therefore, want to urge the other members of the House not to be victims of the false beliefs about the invincibility and infallibility of the market. If anything, the recession, especially the measures adopted to respond to it, showed beyond belief that indeed nothing is infallible.
It is for this reason that government has curved a niche for its active participation in the economy whilst also prioritising the development and the strengthening of the private sector through various interventions which the Minister has mentioned before.
2. The second myth is that of viewing the NGP in isolation from other government initiatives. This is mischievous and does not require much focus as the ideological question I had recently addressed. Safe to say that, everybody is aware that there are various programmes like Industrial Policy Action Plan (IPAP) II and various infrastructure programmes that through their implementation will lead to job creation which is the central focus of the NGP. Let me illustrate this through a glance at our infrastructure programme:
- Addressing the ageing water and sanitation infrastructure in the country requires R10 billion over the next five years. This relates to investment backlog in water infrastructure
- There is a need to replace commuter rail rolling stock – at a budget size of about R89 billion – this will be accompanied by the recapitalising investment in related and auxiliary infrastructure
- There is a need to redress South Africa’s modal imbalance of freight as an attempt to increase rail capacity and rail utilisation capacity–Transnet has budgeted R35 billion for this
- Arresting degradation of non-toll road network (140 000 km of the total 750 000km’s need to be maintained) will require R75 billion in the next few years
- Eskom plans to spend R550 billion in capital expenditure up until 2017 and has to create an additional 50GW by 2025.
One of the key principles underpinning our infrastructure programme is that infrastructure strategies must generate sufficient demand for local goods and services to restart the economy.
In this context, developing the capacity of local industry to supply the inputs to our initiatives is critical. The benefits of local sourcing are enormous.
Local suppliers not only contribute towards the tax base, they also contribute towards strengthening South Africa as a key player in the economic geography of the world.
Chairperson,
Let me conclude by saying:
We have concrete plans and programmes that are anchored by economic development projects which people can see and touch. We are slowly turning our weaknesses into our strengths using the backlogs as stepping stones towards economic recovery that is inclusive as well as jobs creating
Challenges are real and we cannot fail as that will betray the trust our people have bestowed on us and our movement.
Thank you.
Enquiries:
Zubeida Jaffer
Cell: 082 698 677
