Manuel reaffirms job creation target
July 15, 2009
By Ethel Hazelhurst
National Planning Minister Trevor Manuel yesterday reiterated the government's commitment to job creation and halving poverty by 2014, an ideal that economists insist is not possible.
Briefing journalists on the government's medium-term strategic framework, he said: "When the whistle blows to start the first game of Fifa 2010, what's the next phase of infrastructure going to be? We have seen the huge growth rates of infrastructure. But we need continual waves of infrastructure otherwise we are going to have a pro-cyclical trough at the end of the Fifa World Cup."
In other words, the downturn in economic activity that is likely to last into next year will be reinforced by a sharp decline in the construction sector.
Manuel signalled the need for immediate plans to avoid that outcome, saying: "It's what we do in the next 100 days that will determine what happens to all those workers employed in infrastructure."
The framework document, which is based on the ANC election manifesto, reaffirms the government's commitment to halve unemployment by 2014, from the levels of 2004. This means cutting the current unemployment rate of more than 23 percent to 14 percent.
The target, first announced in 2006, requires the creation of 500 000 jobs a year. While job creation between 2006 and last year was close to this, the loss of 180 000 jobs in the first quarter jeopardises that target.
Asked if the goal remained realistic, Manuel replied: "We can't continue with our high levels of unemployment in South Africa. We have to rework all the issues, co-ordinate our resources and deal with a series of microeconomic reforms. We have to be pretty rigorous in the analysis of our poor performance. These changes will require very detailed work with social partners. This is the kind of commitment we will make."
Standard Bank chief economist Goolam Ballim expressed doubt that the goal could be achieved by the target date.
"It's exceedingly ambitious due to the global economic shock," he said. But missing the target "isn't important as long as there is notable incremental progress over the coming years. Concentrating on the target date often distracts from the central issue which is to make good the shortfall in income and wealth."
The framework document outlines efforts to "defy the economic forecasts on the upside and create jobs".
Cees Bruggemans, FNB's chief economist, said he was on record that infrastructure fixed investment was crucial to grow the economy and reduce backlogs. Even with a limited growth rate of 3.5 percent, it was likely to be enough to absorb labour, although he emphasised that this process might be "somewhat different" to Manuel's timeframes, indicating that these might have been a trifle ambitious.
These investments included major infrastructure programmes, public employment initiatives centred on public works projects and large private sector investment projects.
On the question of delivery, Manuel spoke of the need to increase the government's capacity to evaluate departmental performance. He said "tough measures" were taken.
And he stressed the role of management skills in the economy. He said people would not be appointed to key positions - in hospitals and schools for instance - without proper training in management.
Replying to a question about price stability, Manuel supported Reserve Bank governor Tito Mboweni, saying stability is "the mandate the constitution gives to the Reserve Bank" and that the approach to this goal was targeting inflation.
Steps would be taken to reduce costs within the government. Joel Netshitenzhe, head of the Presidency's policy unit, mentioned "short-term objectives", where immediate cuts could be made, and a longer-term expenditure review.
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