Private sector at core of jobs plan
Motlanthe unveils package
February 8, 2009
By Donwald Pressly
Investment by the private sector in the country's infrastructure development plan has emerged as the core of President Kgalema Motlanthe's plan to save South Africa from slipping into a widely predicted recession.
In tandem, Motlanthe has called on development finance institutions - including the Industrial Development Corporation and department of trade and industry (dti) agencies that provide support for business - to underpin private sector companies that are showing signs, or are already in, financial trouble that would inevitably lead to these companies closing or downscaling staff.
In his state of the nation address in parliament on Friday, Motlanthe reached out to trade unions and business by identifying a role for them to play in underpinning existing jobs - and possibly even to defy projected slower growth and reverse recent job losses.
The government is particularly concerned about export industries, including clothing and textiles, the automotive industry and the mining sector.
The dti has been instructed to work with unions and business in troubled sectors to provide "a rescue package".
Such packages are expected to include reciprocal commitments by companies of what they will contribute to turnaround strategies.
Particular attention will be focused on companies in industries that are showing early signs of job losses and distress, such as the electrical and electronics, engineering and building materials sectors.
Motlanthe indirectly lauded finance minister Trevor Manuel and his treasury team for their management of the economy over the past 13 years, but he clearly now wants big business and trade unions to come to the party and assist in a national project to soften the expected economic blows.
He said: "What we do know is that the regulatory environment in our country and the counter-cyclical budget policies we adopted have helped us avoid the worst impact of the [global economic] crisis.
"We are all aware that, because we are strongly integrated into the world economy, demand for our exports has declined; access to finance and inflows of capital have turned for the worse; lower demand has precipitated a scaling down of production; the creation of jobs is negatively affected; and in some sectors retrenchment has become a reality."
Manuel's budget speech on Wednesday is expected to give more meat to a fiscal stimulus package that is being sought by a Nedlac task team headed by Herbert Mkhize, the chief executive of the negotiating chamber for labour, business and the government.
The team, which includes Business Unity SA representative Raymond Parsons and trade union leader Ebrahim Patel, was appointed in December by Motlanthe to forge a response to the crisis.
A draft report notes that a R700-billion capital investment programme had already been announced for the three financial years to March 2012.
The team said "further efforts" must be made to secure additional resources to expand this programme "in the light of the current conditions".
The social partners, the report said, should identify mechanisms of supporting the public investment programme, including considering such initiatives as "the prudent investment of retirement funds and partnerships with the private sector in the implementation of public infrastructure projects".
Instruments such as government bonds to promote private sector investment in water, road, rail, and electricity infrastructure are expected to be created.
Motlanthe significantly said that "mitigating actions" could be undertaken within the private sector to counteract an excessive investment slowdown and unnecessary closures of production lines or plants.
"On its part, government will adapt industrial financing and incentive instruments to help deal with challenges in various sectors and also encourage development finance institutions to assist firms in distress because of the crisis."
The government would intensify public sector employment programmes, which had created 1-million job opportunities by last year, according to the public works department.
Motlanthe said plans to expand employment in public sectors like health, social work, education and law enforcement would continue, and "we will speed up the production of the next phase of the expanded public works programme".
Trudi Hartzenberg of Tralac warned that South Africa should be careful not to embark on a protectionist path.
Expanding state involvement in traditional private sector industries - including financial services - presented problems because the government became a player as well as a regulator, she pointed out.
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