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Create Jobs, Fighting Poverty: An Employment Strategy
Framework
(Released 3 July 1998 - Government
Gazette No 19040)
FOREWORD
In his State of the Nation address in February this year
the President, while noting the successes that the present government had made in
improving the lives of all, and especially of those that have been historically
disadvantaged, lamented the fact that we are not making much progress in eliminating the
scourge of unemployment that afflicts a large segment of our labour force. It is for this
reason that the President stressed the importance of the forthcoming Jobs Summit. The
President said:
"One will not be exaggerating to say that, given its
impact on every thing else we do as a nation, including crime prevention, reconciliation
and the very survival of our democracy, the Jobs Summit is perhaps the most important
event since our first democratic elections; an important launching pad for a determined
national drive as we move into the 21st century".
As a follow-up to the Reconstruction and Development
Programme, government had identified employment creation as a focal pillar for social and
economic transformation, and accordingly embarked on an inter-departmental process of
consultation to prepare an employment strategy which would provide a bold and s from the
various departments for their inputs and participation in the process which has resulted
in this document.
The task at hand is gigantic. Let us put our heads together
to find solutions. Let us have your views.
T T MBOWENI, MP
MINISTER OF LABOUR
Creating jobs, Fighting poverty
An Employment Strategy Framework
I N D E X
Executive
Summary
1. Introduction
1.1. Background
1.2. The Unemployment Challenge
2. The Employment Strategy
Framework 6
2.3. The Vision: Where do we want to go?
2.4. Key Components of the Employment Strategy Framework
2.5. The Importance of Expenditure Reprioritisation
3. Increasing the Demand for
Labour 9
3.3. Special Employment Programmes
3.4. Retaining Sustainable Jobs in Traditional Sectors
3.5. Fast-tracking Movement into New Labour Absorbing Industries
3.6. Enabling Entry for SMMEs
4. Improving the
Employability of Labour 24
4.1.1 Education and Training
4.2. Improving the Functioning of the Labour Market
4.3. Vulnerable Groups
5.
The Development, Implementation and Monitoring of the ESF 31
5.1. The Establishment of a Cabinet Employment Cluster
Committee
5.2. Higher Spending on Employment Promoting Projects
5.3. Statistical Monitoring
6.
The Role of the Social Partners in the Employment Strategy 32
6.1. An Overview of Government’s Commitments
6.2. We Challenge Business
6.3. We Challenge Labour
7. Conclusion 37
[ Top ]
LIST OF ACRONYMS USED IN THIS DOCUMENT
ABE : Adult Basic Education
BCEA : Basic Conditions of Employment Act
BRAIN : Business Referral and Information Network
CBPWP : Community Based Public Works Programmes
CCMA : Commission for Conciliation, Mediation and Arbitration
CECC : Cabinet Employment Cluster Committee
CICC : Cabinet Investment Cluster Committee
CIDA : Canadian International Development Agency
CSS : Central Statistical Services
CWSS : Community Water and Sanitation Services
DTI : Department of Trade and Industry
ESF : Employment Strategy Framework
ETB : Education and Training Board
FRIDGE : Fund for Research into Development, Growth and Equity
GCC : Gold Crisis Committee
GDP : Gross Domestic Product
IDC : Industrial Development Corporation
IDZ : Industrial Development Zones
ILO : International Labour Organisation
IT : Information Technology
JSE : Johannesburg Stock Exchange
LRA : Labour Relations Act, 1995
MDP : Manufacturing Development Programme
MIP : Municipal Infrastructure Programme
MTEF : Medium Term Expenditure Framework
NCPS : National Crime Prevention Strategy
NEDLAC : National Economic Development and Labour Council
NEF : National Empowerment Fund
NGO : Non-Governmental Organisation
RDP : Reconstruction and Development Programme
SDI : Spatial Development Initiatives
SETA : Sectoral Education and Training Authority
SMMDP : Small and Medium Manufacturing Development Programme
SMME : Small, Medium and Micro Enterprises
SPII : Support Programme for Industrial Innovation
SPTSF : Social Plan Technical Support Facility
THRIP : Technology and Human Resources for Industry Programme
UIF : Unemployment Insurance Fund
WTO : World Trade Organisation
[ Top ]
EXECUTIVE
SUMMARY
1. The Unemployment Challenge
1.1 Putting South Africa on a developmental and
employment-absorbing growth path is a long-term challenge which we will need to tackle
together, with a shared vision.
1.2 The whole thrust and mandate of the Government is to
achieve this objective. Policy, programmes and their implementation must be taking us
toward this goal. So important and fundamental is this goal that it is necessary to
continuously assess whether we are moving toward it.
1.3 The new democratic government has had four years to
formulate and implement its policies. To reshape and restructure the economy that we
inherited and to ensure that there is job creation is not a task that we can achieve
overnight. Yet the fact that not enough jobs are being created at this stage and that this
is the perception and experience of ordinary people is cause to reflect and to act.
1.4 The purpose of this document is to undertake such a
reflection and to propose a concrete programme to boost employment growth during the
structural transition that is taking place. Much of this programme involves the more
efficient implementation and co-ordination of existing programmes. However, it also
proposes that we identify areas that are inhibiting job creation, that a number of new
programmes be started, that all social partners make significant contributions and that
all available resources are efficiently applied.
1.5 While we have had many successes in transforming our
economy and in improving delivery, unemployment remains the key concern. There is a
critical need to boost the long term labour absorptive capacity of the economy. We need to
reduce the dislocation caused by structural change, eliminate the institutional
impediments to employment creation and hasten the process toward a sustainable, inclusive,
labour-absorbing growth trajectory. The key objective of the Employment Strategy Framework
(ESF) is to boost employment growth in the short to medium term and to do this in a manner
that will strengthen the likelihood of success in achieving the longer term goals.
1.6 Unemployment is not a problem created recently. It is a
result of previous political and economic policies that led to inadequate attention to
human capital development, a prolonged deterioration in the real growth rate, rising
capital intensity of production and declines in savings and investment since the 1970s.
With the demise of the apartheid system and greater urbanisation, the problem of
unemployment has become more serious and more visible.
1.7 Unemployment, using the international
(‘narrow’) definition, currently stands at about 20%. However, we recognise that
many of our people have been out of work for so long that they have stopped looking.
Unemployment stands at about 29% if the ‘broad’ definition is used, which
includes these discouraged workers. The economy must generate about 250 000 new jobs
in net terms, simply to ensure that the unemployment rate does not rise. To absorb new
entrants into the labour market the economy should generate more than 350 000 net new
jobs per annum. Far more must be generated if we are to seriously reduce the unemployment
rate and eat into the backlog of jobless South Africans which apartheid left us.
1.8 Unemployment, by whatever measure, is unacceptably
high. The poorest households are those where no-one or only one family member works. A job
gives a person, not only income, but self-respect. A job gives a person the opportunity to
contribute to the productive growth of our nation. As a nation our central challenge is to
create jobs, especially sustainable and productive ones. We need to get South Africans
working.
[ Top ]
2. An Employment Strategy Framework (ESF)
2.1 In the context of high and persistent unemployment, it
is clear that we need an Employment Strategy Framework which gives overall direction on
the way forward. Since it will take some time to erode the unemployment problem, this
Framework must guide us through the short, medium and long term.
2.2 In the short run, we seek to directly and
indirectly promote the creation of sufficient numbers of jobs to match net growth in the
labour force. We seek to expand the Special Employment Programmes to raise the level of
job creation as quickly as possible. Even where these are short term employment
generators, they will focus on building important community assets and reinforcing
programmes, aimed at generating longer-term economic opportunities. A number of
sectorally-focused initiatives will be pursued, where there could be quick but sustainable
employment creation, as in services such as tourism, and in certain goods destined for the
local market.
2.3 In the medium-to-long term we seek to
fundamentally propel the economy into one which is innovative, inclusive and labour
absorbing. Overall, we will need to raise the skills base and move into higher value-added
sectors to raise national income, enable a more stable exchange rate and to better reflect
our underlying cost structure. We will need to ensure a sustainable job creating path,
where net job creation exceeds labour force entry. This trajectory will require:
2.3.1 increases in the labour absorptive capacity of the
economy – by expanding the creation of sustainable formal sector employment through
the identification and promotion of higher value added, more labour using industries, with
strong employment multiplier potential; and improving access for small business to
economic opportunities;
2.3.2 improved functioning of labour markets, with an
emphasis on geographic and occupational mobility, greater adaptability to changing
circumstances, reduced occupational discrimination and improved absorption of new
entrants;
2.3.3 vastly improved education and training levels and
improved secondary and tertiary education responses to labour market needs;
2.3.4 improved and more cost-efficient systems of social
security and better and more accessible social services;
2.3.5 tangible improvements in addressing effects of
relevant forms of crime and developing stable communities;
2.3.6 the creation of a more efficient, adaptable and
proactive public service.
3. An Overview of Government’s Employment Strategy
Commitments
3.1 Our policies aim at the development of a labour
absorbing economy that relies on sustainable employment opportunities in the production of
higher value-added goods and services. Overall, a critical minimum package of mutually
reinforcing policies is required to lead us to a sustainable dynamic growth path. The
Employment Strategy Framework aims to improve both the demand for, and the employability
of, labour. Both demand and supply side policies will be constructed so that they are more
closely linked and are mutually reinforcing. A combination of short term and long term
measures will be implemented. We must move to a longer term developmental trajectory and
yet we fully recognise that people need jobs now.
[ Top ]
3.2 To increase the demand for labour,
emphasis will be placed on raising both output and the labour absorption capacity of the
economy by:
3.2.1 creating jobs directly through the strengthening of Special
Employment Programmes, with more financial resources, better co-ordination, more
regular flow of income and more emphasis on the building of sustainable assets. The key
programmes will include the Municipal Infrastructure Programme, Working for Water and
Community Based Public Works Programmes. Two new programmes will be introduced: the Clean
Cities Campaign and the Land Care Campaign.
3.2.2 preserving jobs in the private sector by means of:
3.2.2.1 programmes to enable existing firms to shift into
higher value added, more competitive product niches and to adopt more competitive methods
of work organisation.
3.2.2.2 targeted interventions in mining, agriculture,
construction, and vulnerable sectors in manufacturing such as motors, clothing and
textiles, footwear and the petrochemical-plastics pipeline.
3.2.3 strengthening and refocussing some of the
existing investment promotion policies and programmes. Some programmes have only
recently been introduced, but have already begun to show results. However, some of these
programmes will be under review in the coming year including the Manufacturing Development
Programme(MDP), a range of SMME support services and key aspects of the National Crime
Prevention Strategy.
3.2.4 fast-tracking movement into new labour absorbing
industries by:
3.2.4.1 improving attention to the promotion of
‘non-tradeables’ and service industries
3.2.4.2 supporting the identification and promotion of key
labour absorbing industries, in agriculture, manufacturing and services
3.2.4.3 promoting cluster initiatives which enable the
identification of industry strategy initiatives, particularly in services
3.2.4.4 promoting innovation in technology use and work
practices
3.2.4.5 leveraging investment into the South African
economy through the Industrial Participation Programme
3.2.4.6 reducing the cost of investing in productive
activities with the MDP, the SDIs and the IDZs, restructuring commercial transport
services and addressing key areas of crime.
3.2.5 promoting SMMEs by:
3.2.5.1 establishing local business service centres, which
will be electronically integrated
3.2.5.2 strengthening delivery in the financial services
sector, particularly in the lower end of the market
3.2.5.3 intensifying land reform and extension services
3.2.5.4 strengthening the implementation of local economic
development and local programme delivery
3.3 To strengthen the employability of labour,
our policy focuses on education and training, improving the functioning of the labour
market and devoting special attention to vulnerable groups. A strong package of
‘active labour market policies’ will be introduced to strengthen labour market
matching and the skills base. We aim to:
3.3.1 Strengthen the availability of skills by:
3.3.1.1 enabling easier access to work for non-South
African skilled personnel
3.3.1.2 transforming the training boards system into SETAs
and supporting a substantial increase in private sector expenditure on training
3.3.1.3 augmenting skills and infrastructural development
through the Infrastructure and Employment Investment Programme
3.3.1.4 improving the interface between labour market needs
and the education system
3.3.1.5 improving the allocation of resources in education
and introducing the new curricula
3.3.2 Improve the functioning of the labour market by:
3.3.2.1 revising labour regulation, in consultation with
the Social Partners, to improve criteria relating to the extension of bargaining council
agreements, to loosen provisions related to probation and to reduce the load carried by
the CCMA while increasing its preventative role
3.3.2.2 establishing a national network of Labour Market
Information and Careers Services Centres to guide workseekers towards jobs
3.3.2.3 formulating a more comprehensive social security
and welfare safety net
3.3.2.4 enabling adjustment through Social Plan activities
including the establishment of the Social Plan Technical Support Facility provision of
retrenchment services and local support to economic development.
3.3.2.5 improving coordination in the planning of housing
schemes and the provision of low cost transport services
[ Top ]
3.3.3 Vulnerable groups will receive special
attention, by:
3.3.3.1 reducing direct and indirect discrimination
against women in the labour market by improving access to child care services,
accommodation in areas of economic agglomeration, skilling opportunities and occupations
not normally considered to be ‘women’s work’.
3.3.3.2 promoting youth employment and skills
development with the consideration of a youth learnership wage, a youth training
subsidy, measures to avoid the displacement of existing workers when new young employees
are taken on, improved careers services in schools, internships, and improved vocational
training.
3.3.3.3 enabling the optimal development of the
disabled, by first establishing their social security needs and promoting their
integration into the mainstream economy.
3.4 To fulfill the aims of the Employment Strategy it is
essential that improvements in public service delivery be achieved. The
reallocation of expenditure and of personnel to areas that add social value will require
the introduction of more adaptable employment practices and an affordable number of public
servants.
3.5 In all relevant aspects of policy, attention will be
devoted to improving delivery at the local level and improving coordination in
infrastructural, educational and investment promotion activities so that they can be
mutually reinforcing in enabling growth and employment absorption.
3.6 To provide a vehicle for fiscal support of innovative
programmes aimed at stimulating employment and development opportunities for young people,
we will establish the Umsobomvu Trust, to be capitalised initially from a
charge on demutualisation. These initiatives may receive further support from the Budget.
3.7 A Cabinet Employment Cluster Committee
will be established, to be chaired by the Minister of Labour. This cluster will ensure
that government’s Employment Strategy commitments are implemented. It will oversee a
review of the employment impact of key policy areas, enforce improved policy coordination
and monitor progress on key programme commitments.
3.8 We recognise that human and financial resources are
limited. We therefore challenge the Social Partners to join us in making this workplan.
4. We Challenge Business
4.1 We recognise the contribution made by Business to
social development, in the promotion of corporate social responsibility and the
contribution to the National Skills Fund. We further challenge business to make a
meaningful contribution to employment promotion through demonstrable and tangible
commitments to:
[ Top ]
4.1.1 funding partnerships in support of the programmes of
the Umsobomvu Trust and other employment generating initiatives
4.1.2 promoting youth learnership and employment
4.1.3 facilitating small business entry into the economic
mainstream
4.1.4 enabling progressive workplace change
4.1.5 helping reduce conflict on the shop-floor
4.1.6 building capacity at the local level by establishing
a nation-wide "Managers Service Programme". Skilled professionals would
volunteer their time to assist in the development of capacity in local and provincial
government financial management, the development of Local Business Service Centres, the
Social Plan Technical Support Facility, schools management and upgrading and public works
projects
4.1.7 promoting education and training with a "Schools
Adoption Programme", which would systematically finance the upgrading of schools and
the purchase of books and materials.
5. We Challenge Labour
5.1 We recognise the contribution made by Labour to social
development and democratisation. We further challenge labour to make a meaningful
contribution to employment promotion through demonstrable and tangible commitments to:
5.1.1 contributing to the Umsobomvu Fund
5.1.2 making it easier for young people to enter employment
5.1.3 wage bargaining appropriate to productivity gains and
rates of inflation and which does not contribute to job loss
5.1.4 developing a realistic labour regulation framework,
which enables the restructuring required in both the public and private sectors and
supports an environment for employment creation
5.1.5 helping reduce conflict on the shop-floor.
End of Executive Summary
Back to I n d e x
1. Introduction
1.1 Background
1.1.1 Overcoming apartheid’s political and economic
policies requires fundamental change. This will not occur overnight. Putting South Africa
on a developmental and employment-absorbing growth path is a long-term challenge which we
will need to tackle together, with a shared vision.
1.1.2 Our new democracy inherited an economy characterised
by low growth, high inflation, periodic balance of payments difficulties and huge
disparities in income and access to services. Our aim is to transform our economy into one
which grows faster, has stable prices, and where economic opportunity and income are more
equitably distributed.
1.1.3 We have already begun this process of transformation.
We have expanded our involvement in international trade, finance and nge, eliminate the
institutional impediments to employment creation and hasten the process toward a
sustainable, inclusive, labour-absorbing growth trajectory.
1.1.8 The elements of an Employment Strategy are clear.
International evidence suggests a need to focus on:
1.1.8.1 sound macroeconomic policies
1.1.8.2 investment in human development, including
education, training and basic welfare
1.1.8.3 improving the environment for industrial
development with appropriate support measures and information
1.1.8.4 identifying and supporting forward looking
industries where competitive advantage can be sustained
1.1.8.5 promoting small and medium size business and
linking these to large firms
1.1.8.6 an efficient, affordable and productive public
service
1.1.8.7 a labour market regulatory environment which
facilitates adaptability, and balances the need for flexibility and security
1.1.9 The key to achieving significantly higher employment
rates lies in improving economic growth rates and unlocking the structural barriers to
labour absorption.
[ Top ]
1.2. The Unemployment Challenge
1.2.1 The Extent and Incidence of Unemployment
1.2.1.1 High unemployment levels have been with us for many
years. Apartheid simply kept the problem hidden from view and confined it to the so-called
‘homelands’. Unemployment, using the international (‘narrow’)
definition, currently stands at about 20%. However, we recognise that many of our people
have been out of work for so long that they have stopped looking. stic and not expect that
all new jobs will be high-wage jobs.
1.2.1.5 The economy should ideally generate about
250 000 new jobs in net terms, simply to ensure that the unemployment rate does not
rise. To absorb new entrants into the labour market the economy should ideally generate
more than 350 000 net new jobs per annum. Far more should be generated if we are to
seriously reduce the unemployment rate and eat into the backlog of jobless South Africans
which apartheid left us.
1.2.2. The Causes of Unemployment
1.2.2.1 Unemployment is not a problem created recently: it
is a cumulative problem, inherited from previous political and economic policies. It is
the result of population growth, lack of attention to human capital development, a
prolonged deterioration in the real growth rate and rising capital intensity of production
and declines in savings and investment since the mid-1960s. With the demise of the
apartheid system and greater urbanisation, the problem of unemployment has simply become
more visible.
1.2.2.2 While the causes of unemployment are complex, we
identify six basic issues:
The Structure of Production
1.2.2.2.1 The South African economy is not labour absorbing
due to the inherited capital intensive structure of the economy and the choice of
technologies. This has been caused by previous implicit and explicit incentive structures
and a previously closed economy for manufactured goods.
1.2.2.2.2 The previous protectionist regime left us
unfamiliar with key export markets in value added products, low levels of competition,
poor supply chain relations and a low inclination to invest in skills or research and
development. These characteristics have posed serious blockages to expanding as a middle
income industrialising economy. We are presently facing a situation where large declines
in traditionally employment absorbing sectors such as mining occur without sufficient
gains in other formal sector industries.
1.2.2.2.3 The dualistic character of the South African
economy, previously dependent on the suppression of black majority, means there are few
productive links between the formal sector and SMMEs. In addition, entry is made difficult
due to the character of the financial sector: access to credit is difficult for small
business.
1.2.2.2.4 South Africa’s trade profile shows a
dominance of commodity exports and higher value-added imports. This puts us in a
vulnerable position, which is more cycle-prone, and which benefits less from international
trade and relative prices in world markets. While there has been some improvement, we need
to go much further in diversifying our exports.
[ Top ]
The Level of Investment
1.2.2.2.5 Most economies that have sustained real growth
rates of 3% or more have had investment and savings levels in excess of 20% of GDP. To
generate sufficient employment opportunities, we require real growth rates that are far
higher. Yet, South Africa’s level of investment fell to very low levels in the 1980s
and early ‘90s, only recently recovering to 20% of GDP by 1996.
Human Development
1.2.2.2.6 Apartheid actively blocked the development of our
people. This imposes serious constraints on our growth potential as a middle income
industrialising economy. Instead, our level of human development, measured in terms of
basic standards of education and nutrition more closely matches that of a low income, less
developed country.
1.2.2.2.7 More than 20% of African households, whether
rural or urban based, do not have the resources to maintain a basic nutritional level of
2 500 calories. Nutritional inadequacy results in the stunting of about one-quarter
of all South African children. This diminishes their ability to learn and, later, to lead
productive working lives.
1.2.2.2.8 Resources are poorly distributed, including key
forms of infrastructure, education and social services: this limits access to economic
opportunities both in terms of entrepreneurship and employability in the formal sector.
Pay and Productivity
1.2.2.2.9 An improved standard of living requires increases
in both the level of employment and in real earnings. This should be achieved in
conjunction with higher productivity growth through sector shifts, higher skill levels and
improved work organisation.
1.2.2.2.10 Over the past decade there have been periods
when overall wage growth (including salaries) outstripped productivity growth, and periods
when the opposite has been true. Where real wage rate growth outstrips productivity growth
there is cause for concern since higher unit labour costs could affect international
competitiveness, contribute to inflationary pressures and cause job losses. The most
recent figures suggest that on an economy wide level, excluding agriculture, the growth in
labour productivity has exceeded annual growth in real earnings per worker and has been
associated with a decline in the growth of unit labour costs, at least in recent years.
Unfortunately there are also indications that some productivity improvements may be
artificial and may have arisen simply through shedding of labour. Productivity gains are
important and must be associated both with improved wages and with increases in employment
levels.
Labour Market Regulation
1.2.2.2.11 Racially restrictive labour hen tourists feel
unsafe. It drains our economy whenever white-collar crime and fraud occur. In short, crime
increases the costs of doing business. It contributes to negative investor perceptions,
and it makes investors less eager to employ large numbers of people.
Back to I
n d e x
2. The
Employment Strategy Framework
2.1 We remain committed to the central pillars of the RDP,
which aims at achieving macroeconomic stability, job creation, human resource development,
meeting basic needs and providing a social security safety net. To achieve any one of
these goals in the long term, it is essential that all are implemented in a coordinated,
mutually-reinforcing manner. Given apartheid’s legacy, the four latter goals will
take some time to achieve and will require substantial improvements in the application of
resources. Achieving macroeconomic stability, is one central thrust of our strategy, and
much progress has already been made to that end. Our macro-economic strategy also put into
place policy leading to the reprioritisation of public expenditure to enhance its
productivity and contribution to RDP objectives.
2.2 In the context of high and persistent unemployment, it
is clear that we need an Employment Strategy Framework (ESF) which gives overall direction
on the way forward. A more targeted approach, with more emphasis on the sequencing and
coordination of policy is required. Since it will take some time to erode the unemployment
problem, this Framework must guide us through short, medium and long term strategic
thrusts.
2.3 The Vision: Where do we want to go?
2.3.1 In the short run, we seek to directly
and indirectly promote the creation of sufficient numbers of jobs to match net growth in
the labour force. To ensure that the unemployment rate does not rise, about
250 000 net new jobs should be generated by the economy. To halt any growth in the
numbers of unemployed and begin reducing the rate of unemployment, the economy will need
to generate 350 000 net new jobs each year. We especially aim to improve the
employment levels of low skilled workers and young labour market entrants.
2.3.2 In the medium-to-long term we seek to
fundamentally propel the economy into one which is innovative, integrated, inclusive and
labour absorbing. Overall, we need to raise the skills base and move into higher
value-added sectors to raise national income, enable a more stable exchange rate and to
better reflect our underlying cost structure. We will need to ensure a sustainable job
creating path, where net job creation exceeds labour force entry. To this end, it will be
essential to raise the labour absorptive capacity of the economy by generating a critical
mass of economic activity to enable sufficient growth rates in conjunction with increases
in the number of jobs created per million rand invested.
[ Top ]
2.4 Key Components of the Employment Strategy Framework
2.4.1 The Employment Strategy Framework focuses on ways of
raising the demand for, and the employability of, labour. Both demand and supply side
policies must be constructed so that they are more closely linked and are mutually
reinforcing.
2.4.2 To increase the demand for labour,
emphasis will be placed on:
2.4.2.1 expanding the creation of sustainable formal sector
employment through the identification and promotion of higher value added, more labour
using industries, with strong employment multiplier potential
2.4.2.2 preserving sustainable jobs in ation of the system
of industrial skilling
2.4.3.3 improving the delivery and cost-efficiency in
social security systems and ensuring greater accessibility of social and infrastructural
services
2.4.4 Creating a more efficient, flexible and proactive
public service will be essential to achieving this vision. Enhancing the productivity of
public expenditure will require improvements in the allocation of financial resources, in
the deployment of public servants, in work organisation and in programme coordination.
2.4.5 A critical minimum package of mutually reinforcing
policies will be required to lead us to a sustainable dynamic growth path. Spending more
money is not necessarily essential to make this work: spending it better is vital.
Improved policy coordination will be key to the success of this strategy. Greater
attention will be devoted to coordinating clusters of activity. In particular, we will be
focusing on greater coordination in the provision of basic infrastructure, of social
services, of information services and of job creation support programmes. We inherited a
government where programmes were implemented in isolation: in this way, policies and
programmes have far less impact than if organised and coordinated to maximise their
benefits. For example, we aim to explore the benefits of ensuring that services related to
housing, transport, health care and education are located within close proximity to each
other and in relation to areas of existing or planned economic agglomeration.
2.4.6 To ensure the implementation of this vision, a
Cabinet Employment Cluster Committee will be established to monitor Government’s
commitments. This Committee will be responsible for the identification of feasible targets
for reducing unemployment over a given number of years. We estimate that the labour force
is growing by about 2.5% per annum and that there are about four million unemployed. The
targets will be determined by assessing how many jobs might be created
‘directly’ and ‘indirectly’, through multiplier effects. All key
policies will be reviewed and it will be ensured that the commitments made in this
framework document are implemented. As circumstances change, all relevant aspects of
government policy will be reviewed, as indeed some are already being reviewed, to assess
their impact on job creation.
2.4.7 The Employment Strategy is framed within the context
of Government’s macro-economic targets and is therefore concerned with the potential
consequences of the proposals for inflation, the balance of payments and public borrowing.
It is not expected that the Strategy will have any significant impact on inflation or
public borrowing.
[ Top ]
2.4.8 The implementation of a bold approach to employment
policy within the context of structural unemployment requires either increased public
expenditure and/or the restructuring of public expenditure. Within a tight fiscal policy
framework, key policy targets may be slower to reach and will need to be met through the
reallocation of expenditure rather than increased expenditure.
2.5 The Importance of Expenditure Reprioritisation
2.5.1 The ability to implement policy reforms and improve
delivery should not be underestimated, even within relatively tight expenditure
constraints. However, the bulk of the budget is tied into line items which are relatively
inflexible. Nearly three-quarters of government consumption expenditure is allocated to
the wage bill. Reprioritisation in the allocation of resources, and therefore concrete
moves towards employment promotion, will occur only if sufficient funds can be reallocated
to more productive purposes. In order to achieve greater social efficiency in public
expenditure, it may be necessary to close down some activities in order to enhance others.
2.5.2 We inherited a public service with inflexible
employment practices which impose high costs. Directly, we are unable to shed or redeploy
personnel where they do not add productive value to service delivery. Indirectly, the
application of public funds to unproductive expenditure means that services of higher
prioritisation are not adequately delivered.
2.5.3 Some public service jobs will be affected, freeing up
substantial resources for other purposes. The aim is to raise the productivity of public
expenditure by allocating it to areas that promote growth, inclusivity, social adjustment
and human development.
2.5.4 The mechanisms identified to facilitate the
rightsizing process were attrition and the abolition of funded vacancies, the granting of
voluntary severance packages and the redeployment of supernumery personnel. For various
reasons, the process of reduing the size of the public service in order to enhance the
efficiency of service delivery has not been successful.
2.5.5 Much of the Employment Strategy Framework depends on
the improved allocation of resources. It is essential that the transformation of the
public service takes place. Agreement must be reached on achieving greater flexibility in
public service employment practices, particularly with respect to job definitions, work
organisation, redeployment; an acceptable trade-off between wages and employment; the
restructuring of pension funds; and changes in personnel policy in social services toward
qualified, less expensive personnel, where possible.
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3.
Increasing the Demand for Labour
3.1 The decline in traditionally labour absorbing
industries, and particularly mining, is a major contributor to the current unemployment
problem. Shifts in economic policy and globalisation pressures since the transition have
further contributed to a decline in some industries and the emergence of others. The net
employment impact of these shifts have not yet been sufficiently quantified.
3.2 In the medium to long term, the key to raising the
overall demand for labour lies in identifying new sustainable niches, in both tradables
and nontradables. However, the period of adjustment takes time and people need jobs now.
Hence, we propose three inter-related strategies to increase the demand for labour. These
include: reducing unnecessary job loss in traditional industries with interventions to
assist these industries to improve productivity, creating jobs through Special Employment
Programmes, promoting the expansion of new activity and creating an enabling environment
for SMMEs.
3.3. Special Employment Programmes
3.3.1 Initiatives which promote employment in the private
sector will take time to show results. Strategies to reduce unemployment in the short run
may have to emphasize the implementation of Special Employment Programmes. While this
approach may be sub-optimal, it is necessary due to constraints on output growth in the
short run. The package of Special Employment Programmes will be dramatically expanded over
the next few years, with greater attention paid to the finance stream, improved
coordination of activities, sustainability, training and the contribution to local
economic activity. The MTEF allocation for Special Employment Programmes in 1998/9 was
about one billion rand, rising to almost R1.8 billion by 2000/2. In recognition of the
immediate need to generate employment opportunities, we will raise this allocation. The
programmes will include:
3.3.1.1 Clean Cities Campaign
3.3.1.1.1 Currently there are an estimated 15 000
employees in the waste management industry. There appears to be potential for the creation
of many more jobs through the delivery of waste services to poorly serviced areas. A
National Waste Management Strategy is currently being developed, with an emphasis on
promoting SMMEs. The Clean Cities Campaign will implement municipal waste collection in
poorly serviced areas, linking into small recycling operations to facilitate the
sustainability of the programme. The Campaign will also enable the creation and
maintenance of recreation facilities and support some inner-city building rehabilitation.
Ultimately, this Campaign will promote a sense of pride in our cities and make them more
attractive for visitors.
3.3.1.2 Working for Water
3.3.1.2.1 Working for Water is a project which clears
invasive alien vegetation: in addition to creating short term employment, it removes water
absorbing alien vegetation and promotes water security. It is an inexpensive short term
job creation and conservation project: One direct or indirect job is created for every
R10 000 spent per year; the wage component accounts for over 60% of costs; the
implementation time takes weeks; little initial training is required; the cost/benefit to
water security of alien plant clearing is far lower than for other forms of water
retention.
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3.3.1.2.2 While Working for Water was previously funded
off-budget, it was allocated R150 million in the last quarter of the 1997/8 budget year.
About 38 000 direct short term jobs have been created; at least half of those
employed are rural women in KwaZulu/Natal, Eastern Cape, Western Cape, Northern Province
and Mpumalanga.
3.3.1.3 Land Care Campaign
3.3.1.3.1 The Land Care Campaign is a community based
programme supported by both the public and private sectors through a series of
partnerships. It focuses on the rehabilitation and conservation of natural resources
(soil, water sources and vegetation) through sustainable utilisation and the creation of a
conservation ethic through education and awareness. In addition, it seeks to address rural
poverty through sustainable job creation.
3.3.1.3.2 The Land Care Campaign will reinforce the Working
for Water Programme. This will be done by concentrating on the wider catchment areas away
from the waterways by eradicating invader plants and declared weeds which are degrading
the agricultural potential of such areas. For the rural poor involved, the programme will
support social upliftment and contribute to sustainable job creation and the development
of entrepreneurial skills.
3.3.1.4 Municipal Infrastructure Programme
3.3.1.4.1 The Municipal Infrastructure Programme (MIP) and
Community Water and Sanitation Programmes (CWSS) channel capital subsidies to investment
in basic service infrastructure for low income households and towards the rehabilitation
of collapsed infrastructure in previously disadvantaged areas. It is connected to the
housing subsidy programme in its provision of bulk infrastructure in municipalities for
low income housing projects. The MIP has an urban focus although about one-quarter of the
funds are spent in rural areas. The Department of Constitutional Development estimates
that by the end of 1997, 242 520 people will have been employed on these projects,
providing contracts to 1 569 SMMEs. About 94 300 people will have received some
form of training.
3.3.1.5 Welfare Programmes
3.3.1.5.1 We aim to redirect welfare spending away from
programmes that promote dependency towards those that offer a more developmental approach
aimed at social investment to build human resources and social assets. The Department of
Welfare has embarked on several initiatives to operationalise its shift towards
developmental welfare. Based on the poverty profiles of provinces, it has designed an
implementable social development programme. This includes the pilot Flagship Programme for
Unemployed Women with Children Under Five. These projects are meant to offer opportunities
for unemployed, poor rural women with young children to break out of hardship and poverty
by providing training, education and social resources.
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3.3.1.6 Community Based Public Works Programmes (CBPWP)
3.3.1.6.1 The CBPWP is aimed at poverty alleviation through
job creation, primarily focusing on rural areas. The programme is implemented through
provinces and NGOs. A recent evaluation has shown that this programme has successfully
reached poor communities, as demonstrated by those employed and trained and by the spatial
distribution of activities. Over 900 projects have been implemented, mainly in rural
areas, creating about 41 650 person-years of employment. In 1998/9, the programme
will focus on creating productive assets and assets that improve access to markets for
rural communities. A greater emphasis will be placed on improving coordination with an
emphasis on social assistance and the development of sustainable community assets. The aim
is to improve coordination and spatial targeting of initiatives to reduce waste and
dramatically enhance the effectiveness of each programme.
3.3.1.6.2 This programme was recently evaluated by the ILO
and it was shown to be conceptually and practically one of the best in the developing
world. We are determined to ensure improved coordination with other providers of social
infrastructure and services, to reduce the gender bias in the access to opportunities
generated, and to optimise the potential for skills transfer within each short project.
3.3.1.7 Improving coordination between Special Employment
Programmes and sustainable economic activity will form an important shift: the intention
is to support new activities and to enable the unemployed greater access to economic
opportunities. For example, eco-tourist schemes will be developed to link relevant public
works programmes with training in conservation: this can enable unemployed youth to access
short term employment opportunities, gain training, and then be employed on a more
sustained basis or become self-employed as tour guides or in other functions which are
generated by virtue of the creation of new facilities. Furthermore, Special Employment
Programmes will be used in support of the establishment and development of Spatial
Development Programmes and Industrial Development Zones.
3.4 Retaining Sustainable Jobs in Traditional Sectors
3.4.1 The previous apartheid policy framework was aimed at
ensuring self-sufficiency for political and strategic reasons. Local industry was
protected by high tariff barriers, the exchange rate was allowed to appreciate and
assistance to industry took the form of demand-side interventions. These policies failed
to create a dynamic manufactured goods sector.
3.4.2 The restructuring of tariff protection, which started
in 1995, has not had the disastrous consequences many commentators were predicting
earlier. The de-industrialisation which has accompanied tariff liberalisation in a number
of other developing countries has been avoided because of careful segmentation and
sequencing of tariff reform. The devaluation in 1996 offset some of the effects of the
tariff reform.
3.4.3 However, it is recognised that the transition from an
isolationist apartheid economy to an outward-looking, job creating economy can result in
temporary job losses. These will eventually be restored and multiplied in new competitive
industries. During a period of adjustment, it will be necessary to explore creative
approaches to slowing job loss in the private sector. After long years of import
protection, the evidence points to old-style management practices in many industries. Not
all job losses in this period are necessary: to help old firms adjust to new challenges
instead of closing down, a range of programmes have been introduced. Some of these
programmes are equally suitable to the promotion of new investments. Policy therefore
focuses on assisting firms to embrace the new opportunities available to them in terms of
product innovation, work organisation and technological change. Strategies have been
formulated for sensitive subsectors within agriculture, mining, manufacturing and
construction.
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3.4.4 Agriculture
3.4.4.1 Substantial progress has already been made in
agricultural reforms. In particular, the deregulation of agricultural markets and trade
liberalisation has enabled substantial entry of new businesses and has encouraged a shift
to higher value added labour intensive horticultural crops. The new national Water Policy
is designed to encourage and facilitate the shift of irrigation to such intensive
agriculture. This will be assisted by the IDC’s Orchards Scheme which encourages the
expansion of orchards and vineyards in rural areas. The Land Bank is undergoing a massive
transformation to better serve target farmers with the introduction of a range of new
products and loan schemes. Some progress has also been made towards improving labour
relations in the agricultural sector, with the aim of discouraging retrenchments,
evictions and violence. Policy will be further reformed, as follows:
3.4.4.1.1 SMMEs will be promoted through land settlement,
grant assistance and production loan schemes to small farmers and the promotion of
agri-processing activities that enable diversification.
3.4.4.1.2 Programmes to promote land use intensification,
labour intensive products and processes will be explored.
3.4.4.1.3 Financial assistance will be oriented to the
resource poor: an emphasis will be placed on the revitalisation of the extension service,
improved access to land, a land care campaign, training and a reorientation of research
toward the needs of small farmers.
3.4.5 Mining
3.4.5.1 The structural decline faced by the mining industry
has led to the shedding of more than 230 000 jobs in the past decade. This decline is
largely attributable to the scaling down of the highly labour intensive deep level gold
mining industry. This industry is faced with declining reserves and is consequently
finding international competitiveness at present gold prices increasingly difficult. There
is some expectation that gold prices will improve in the medium to long term, resulting in
improvements in employment trends should some attention be devoted to the maintenance of
existing capacity. Our approach includes the following:
3.4.5.1.1 The identification of more competitive sectors
for development such as fossil fuels, industrial metals, shallower smaller scale mining
and minerals beneficiation.
3.4.5.1.2 The management of downscaling the mining
industry: ideally, we aim to preserve mining employment for as long as economically viable
and socially desirable. Once this has been exhausted, a social plan approach is taken to
deal with retrenchments in a humane way, with attention devoted to retrenchment
procedures, strategies to lessen the impact of job loss on retrenchees’ communities
and developing alternative employment opportunities where possible. The Gold Crisis
Committee (GCC) has been established, following agreement in the recent mining summit. The
GCC consists of members from government, organised labour and the Chamber of Mines. Its
objectives are to minimise job losses. For example, the GCC is presently undertaking a
cost-benefit analysis of State assistance to marginal mines and is investigating the
appropriate balance between capital and labour intensive mining, downstream beneficiation
and marketing opportunities and the possibilities of reducing speculation in the gold
market. Where job losses can not be avoided, the GCC is tasked with putting forward
appropriate social adjustment measures and alternatives.
3.4.5.1.3 Optimisation in use of mineral rights: it is
proposed that the right to prospect and mine for all minerals be vested in the State.
Mineral rights holders would be encouraged through legislation and other measures to make
underutilised mineralised areas available to other developers. Performance measures will
be developed to ensure optimal use of our mineral resources.
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3.4.5.1.4 Assisting the development of smaller scale mines:
new entrants to the minerals industry are substantially blocked by inadequate availability
of development capital. The up-front costs of mining project evaluation and planning,
entailing exploration and environmental impact assessments, are extremely high and risky.
We are developing a mechanism to assist first time entrepreneurs to overcome these
constraints. A National Steering Committee of service providers has been established to
stimulate the development of sustainable small scale mines, by developing an appropriate
institutional framework to assist entrepreneurs in exploration, project evaluation, skills
development, complying with the regulatory environment, and obtaining capital resources.
3.4.5.1.5 An integrated minerals information system will be
developed, which includes all areas that a potential investor or entrepreneur could
require.
3.4.6 Manufacturing
3.4.6.1 For key sensitive sectors facing broad
restructuring, sectoral measures have been developed. These include the Motor
Industries Development Programme which has not only avoided significant job loss, but
created new jobs through exports; the clothing and textiles programme which includes duty
free credit certificates and human resource development; the emergency footwear programme
currently under development behind a temporary import quota system; and initiatives in the
petro-chemicals/plastics pipeline. Trade sensitive industries can also take advantage of
other DTI programmes which facilitate innovation, work re-organisation and exporting.
Re-investment in machinery and equipment is facilitated by the accelerated depreciation
allowance.
3.4.7 Construction
3.4.7.1 Employment trends in the construction industry are
not fully known. While formal construction employment has declined, it appears that
substantial numbers of jobs have been created through outsourcing and labour-only
subcontracting arrangements. In addition, the Municipal Infrastructure Programme,
Community Water and the housing development programmes have created substantial numbers of
employment opportunities, although these have not been sufficiently quantified.
3.4.7.2 The building industry is one of the most labour
intensive in the economy. Employment may be generated through increased demand or more
labour intensive methods.
3.4.7.3 Expanding housing delivery is one way to increase
demand. It is estimated that, in 1997, every R1million invested in the housing sector
generated 57 direct and 86 indirect employment opportunities. While these are not
sustainable jobs, they do make an important short-term contribution. It is estimated that
the Government’s low-income housing programme generated 109 445 direct and
164 168 indirect employment opportunities in 1997, with an expenditure of under R2
billion on the subsidy programme. The cost of each employment opportunity has fallen by
15-20% since the inception of the programme. Mechanisms are being put into place to
improve the quality of housing delivery by addressing non-payment for services,
normalising relationships with lenders, protecting against poor workmanship, offering a
national housing subsidy scheme and improving access to housing credit.
3.4.7.4 Increasing labour-output ratios is more of a
possibility in civil engineering than in the building sector. The public sector spending
accounts for about 42% of total construction investment, which is mostly spent in civil
engineering works. Hence, government can have an important influence on construction
employment.
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3.4.7.5 Key constraints on employment generation include:
industry volatility, the short duration of projects, difficulty in ensuring access of
previously disadvantaged groups to business opportunities, work and training. Excessively
capital intensive and import intensive methods are used. We aim to address these
constraints by:
3.4.7.5.1 introducing the Emerging Contractor Development
Programme to enable entry of small scale and emerging construction businesses
3.4.7.5.2 revising contract documentation and developing
appropriate construction delivery models to enable risk sharing and the entry of a variety
of contractors of differing competencies
3.4.7.5.3 promoting the use and production of locally
sourced materials, through attention to technology development
3.4.7.5.4 establishing a register of contractors,
consultants and training providers to monitor trends and developments in the industry.
3.5 Fast-tracking Movement into New Labour Absorbing
Industries
3.5.1 We aim to promote the quality and quantity of
investment required by this economy through a set of investment facilitation measures,
which encourage a movement away from large-scale, capital intensive, natural resource
based industrial production towards the production of more labour intensive, higher
value-added goods and services.
3.5.2 While we can reap much from entering the global
economy, this integration also constrains the types of measures that we can use to promote
new industries. For example, support measures for industry are now circumscribed by World
Trade Organisation (WTO) rules. We also have fewer options available to leverage desired
behaviour from investors than did some other emerging markets. South Africa has a
relatively small domestic market, is far from its major trading partners and therefore
lacks the advantages that countries such as China, Malaysia, Indonesia, Thailand or Mexico
had in negotiating developmental behaviour from foreign investors.
3.5.3 We aim to generate a more competitive environment by
focusing efforts on building economies of agglomeration in terms of infrastructure, skills
and knowledge formation. These efforts should enable the creation of an advantageous
environment which leads to falling manufacturing costs, rising returns to knowledge and a
growing market.
3.5.4 The key policy elements emphasise: improved access to
information, the promotion of competition, the encouragement of strategic inter-firm
co-operation, the identification of strategic opportunities, reduced transaction costs,
improved managerial and production practices, and the reduction in uncertainty.
3.5.5 Promoting "Tradeables" and
"Non-tradeables
3.5.5.1 Substantial effort has been devoted to
reintegrating with the global economy over the first years of governance. This integration
should now reap benefits associated with the exchange of ideas, information and
technology. In addition, we have a relatively small domestic market which is growing
slowly: international trade enables us to identify competitive niches and wider marketing
opportunities.
3.5.5.2 There are three main programmes aimed at promoting
exports. Two of these programmes, the Export Marketing and Investment Assistance Programme
and the Short Term Export Finance Guarantee Programme, focus on supporting small and
medium exporters. The third programme, which offers credits and guarantees for bigger
export projects, is playing an important role in supporting sophisticated local industries
that win major foreign contracts.
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3.5.5.3 Many of the programmes outlined below support the
development of both tradables and non-tradables. Non-tradables are products, such as
building materials or many services, that are not generally exported. They tend to be
excellent employment generators and can be easier to promote. SMME’s tend to be
stronger in the production of non-tradeable goods and services. More attention will be
devoted to the promotion of non-tradables and in the promotion of services.
3.5.6 Generating Employment through Service Industries
3.5.6.1 We recognise that historically much focus has been
placed on resource-based industry and on manufacturing. Yet, service industries may
provide the quickest forms of employment creation, generally have low start-up costs and
could yield more opportunities for smaller entrepreneurs.
3.5.6.2 Tourism is one of the few industries with
the potential to create large numbers of direct and indirect jobs in the short run.
Already it employs an estimated 500,000 people. It is also an industry with great SMME
growth potential. To support the expansion of this sector, we are proposing the
establishment of a dedicated fund, allocated on the basis of matching contributions from
the private sector. Priority would be given to strengthening marketing activities. In
addition, attention would be devoted to the development of new facilities in previously
impoverished areas. An intensive collaborative cluster study process will be undergone
over the next year, to map out a long term vision and the identification of potentially
competitive market segments. A special empowerment programme aimed at providing advisory
and financial services will be established. Over the coming year a portfolio of aggressive
but appropriate tourism development incentives will be developed.
3.5.6.3 The information technology (IT) sector,
particularly the software sector, has grown dramatically in recent years: it is a key
employment sector for the 21st Century. To ensure that South Africa exploits the
opportunities offered for growth and employment creation in the IT sector, the DTI is
driving a R11 million, three year industrial strategy study for the industry, in
cooperation with the Canadian International Development Agency (CIDA).
3.5.7 Generating Employment through Manufacturing
3.5.7.1 We expect that new industrial jobs will account for
no more than one out of every four new jobs in South Africa, but will probably lead to two
out of the other three jobs being created. This explains the attention devoted to
encouraging investment in manufacturing, despite low direct employment effects.
3.5.7.2 Employment creation in the industrial sector is a
long term endeavour, reaping long term gains. Most major investment decisions take between
18 months and 3 years to make. While the jobs take time to create, they will be with us
for some time.
3.5.8 Promoting Competitive Industry Strategies
3.5.8.1 The changing practices of rival producers in other
countries, together with the changing demands of consumers, require a response from the
South African industry which goes beyond physical restructuring. Competitive advantage
must also be derived from intra- and inter-firm cooperation. Improved cooperation and
information flow is needed between stakeholders at the shopfloor level, between producers
and their customers, between companies with common interests, and between business, labour
and government at the national and industry level.
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3.5.8.2 South African manufacturers have historically
competed for a share of the local market. The environment has resulted in low levels of
trust. Joint action amongst industrialists has tended to focus on requests for import
protection. In the emerging economic context, few firms are positioned to respond to a new
competitive environment single-handedly. Without the experience of cooperation, it is
unlikely that parties will come together to develop shared resources to enhance their
competitiveness. This is seen as a market failure which requires government intervention.
We see our role, not in prescribing competitive strategies, but in facilitating access to
information and in encouraging greater cooperation. The key programmes include the
"cluster" and sector strategy initiatives, the Fund for Research into
Development, Growth and Equity (FRIDGE), the Sectoral Partnership Fund and the Workplace
Challenge.
3.5.9 Promoting Innovation
3.5.9.1 We support two pillars of technology development
which include investment in human resources and support for technological innovation.
Increasingly, we will aim to support selective interventions in education and training to
build an appropriate skills base. To promote innovation, we seek to strengthen the ability
of local firms to select, bargain for, and buy technologies in international technology
markets. We further aim to regulate technology imports and facilitate local research and
development. We are moving towards establishing a National System of Innovation aimed at
promoting innovation through improved coordination in the activities of the science,
engineering, and technology community. A range of programmes to support innovation have
been established, including: the Foresight Programme, the Innovation Fund, the Support
Programme for Industrial Innovation (SPII) and the Technology and Human Resources for
Industry Programme (THRIP).
3.5.10 Leveraging Investment
3.5.10.1 The Industrial Participation Programme was
established in 1997. It requires that those awarded large government contracts, where the
import content is greater than $10 million, make local investments equivalent to 30% of
the imported value of the contract. Although this is a new programme, it has already
elicited investment plans worth several hundred million rand. Current contracts being
finalised are expected to stimulate several billion rands worth of new investments, and
many thousands of jobs.
3.5.11 Reducing the Cost of Investing and Doing Business
3.5.11.1 We aim to encourage local and foreign productive
investment by reducing the cost and hassle of doing business in South Africa. Key
programmes are aimed at easing the tax burden on new investments, expediting import and
export activity, facilitating labour relations, supporting skills upgrading, raising the
efficiency of commercial transport and improving security.
3.5.11.2 The Manufacturing Development Programme (MDP)
consists of the tax holiday programme for bigger projects and the Small and Medium
Manufacturing Development Programme (SMMDP) for smaller projects.
3.5.11.3 The Tax Holiday programme is currently under
review. The programme elicited over 50 new investment projects during the past financial
year, which will create 5 500 jobs directly and 17 000 jobs indirectly. Yet, the
programme could be significantly more effective. The review will establish the extent to
which this may be attributed to weak marketing or its actual formulation. In the review we
will consider the amendments to the programme including a change in the employment
incentive and the inclusion of business expansions. This latter provision should have an
impact on the employment generating potential of the tax holiday, in terms of enabling the
strengthening of existing businesses and in encouraging small businesses to expand.
3.5.11.4 Spatial Development Initiatives (SDIs) and Industrial
Development Zones (IDZs) aim to generate long term, internationally competitive growth
and development, whilst at the same time restructuring the apartheid space economy. Most
of the regions receiving attention are those experiencing high rates of unemployment. The
SDIs and IDZs will enable the development of competitive and outward oriented investment,
producing local linkages, which should create sustainable job opportunities.
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3.5.11.5 SDIs leverage private investment funds by
packaging industrial projects and introducing these to potential investors. They install
and/or upgrade physical infrastructure through public sector institutions including
parastatals. Each SDI is designed around at least one anchor project, often funded by the
IDC. The SDI programme will have important effects in promoting industrial development in
central coastal KwaZulu/Natal, agro-tourism on the Wild Coast and northern KwaZulu/Natal
(Lubombo) and manufacturing, agricultural and tourism in the Maputo Development corridor,
the West Coast Initiative(Western Cape) and the Platinum Corridor (Pretoria to Gaborone).
We are currently investigating the potential for an information technology SDI in Gauteng.
During the 1997 calendar year, the SDI programme led to 29 new investment projects
creating a total of about 10 000 new jobs. A further 400 projects are in the
pipeline, which could lead to the creation of an additional 83 000 new jobs.
3.5.11.6 IDZs constitutes a key new job-creating programme
to be implemented from 1998. IDZs are designed to attract export-oriented, high value,
labour-absorbing projects by providing excellent locations combined with superior
infrastructure, import and export facilitation, a single-stop regulatory authority, as
well as existing investment incentives. All relevant labour legislation and environmental
regulations will apply in these zones. Emphasis is placed on training facilities and
expedited dispute resolution mechanisms. Port areas targeted for IDZs include Coega,
Richards Bay, Saldhana and East London.
3.5.11.7 It is essential that the efficiency and cost of commercial
transport services be improved. There is a misalignment between transport services and
a value-added export-led growth strategy. While transport and handling of bulk commodity
exports is competitive, there are serious cost and service disadvantages found in the
transport and handling services for the export of value-added exports. In addition, the
dependence on road services generates negative externalities through overloading and road
damage. This competition leads to underutilisation of (and losses on) rail networks. Yet,
competition from roads does not adequately reflect the true costs, which arise from
externalities and subsidisation. About half of the transport asset base is owned by
parastatals. A restructuring of state owned transport enterprises is required, done within
an overall transport strategy.
3.5.11.8 To reduce the cost of doing business and improve
investor confidence in our country, it is essential that we improve security and reduce
crime rates. Key areas of the National Crime Prevention Strategy aim to reduce the
cost of crime to industry, to reduce the risk associated with investment and to enhance
productivity by promoting the provision of services to workers that have experienced
violence-related trauma.
3.6 Enabling Entry for SMMEs
3.6.1 As net job creators, even in periods of recession,
SMMEs can help to raise incomes and improve the distribution of wealth. They broaden
participation in the national economy and widen the ownership of assets. In a relatively
concentrated, middle income industrialising country, SMMEs are more likely to emerge from
linkages and spin-offs related to the growth of larger firms. It is most probable that
most SMME growth will emerge in the service sector, as well as subcontracting activity in
the manufacturing sector. In South Africa, the greatest barriers to entry may be
attributed to poor market information, a weak skills base (including both basic education
and artisan skills) and poor access to finance. While real interest rates are high, it
does not appear that the cost of finance is the major barrier: more important are norms in
commercial risk analysis and the lack of collateral of emerging entrepreneurs. Hence, the
expansion of SMMEs will be greatly facilitated by the promotion of linkages between firms
and improved access to market information, managerial support and capital.
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3.6.2 In South Africa, SMMEs were previously constrained by
highly restrictive rules and regulations. Some of these regulations restricted economic
activity on the basis of race, while others more broadly limited market entry. Hence, the
lifting of racially discriminatory legislation and market deregulation has had a major
impact on SMME entry in many sectors. For example, the deregulation of agricultural
markets has already enabled substantial entry into sectors such as milling and baking.
Trading has grown exponentially with the lifting of key restrictions.
3.6.3 By 1996, we estimate that there were more than one
million SMMEs operating in South Africa, absorbing more than a quarter of the labour
force. This estimate is in addition to the large number of people involved in survivalist
activities.
3.6.4 Much still needs to be done: the Centre for Small
Business Promotion has been established in the DTI to champion, implement, monitor and
evaluate the National Small Business Strategy. The expansion of SMMEs will be facilitated
with support services, an appropriate regulatory environment and improved access to
finance and land.
3.6.5 Facilitation and Support Services
Ntsika
3.6.5.1 Ntsika has been established to facilitate the
development of training capacity, to improve service provision to SMMEs, to enable
assistance targeted at disadvantaged groups, to promote linkages between SMMEs and
government and big business and to improve access to information for SMMEs. It primarily
works through existing intermediaries such as Local Business Service Centres and
entrepreneurial and vocational training institutions.
Local Business Service Centres
3.6.5.2 We will establish Local Business Service Centres
around the country: these will serve as a hub for business counselling and advice,
training, information and networking. An SMME helpline will be established. The Business
Referral and Information Network (BRAIN) is a major initiative: this is a database and
on-line service that will provide substantial generic and sector focussed information and
services.
3.6.5.3 Eventually, integrated local service centres will
be established, providing business information, labour market information, careers
services and communication services.
3.6.6 The Legal Environment
3.6.6.1 A National Small Business Regulatory Review Team
has been established to advise government on the appropriateness of the legal and
regulatory framework for small business. Task teams have been established to review
regulations related to labour, tax, business and trade, property, land ownership, finance,
and by-laws and ordinances.
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3.6.7 Land Reform and Extension Services
3.6.7.1 Access to land can make an important contribution
to economic security and offer important opportunities for income generation. Headway has
been made in implementing land reform programmes, although the results have been slower
than expected. However, the programme is moving forward faster now, as policy and
procedural issues are being resolved.
3.6.7.2 The three land reform programmes include land
restitution, tenure reform and redistribution. Land redistribution programmes are expected
to have the most impact on rural employment in the medium term. The redistribution
programme aims to provide the poor, labour tenants, farmworkers, women and emergent
farmers with access to land for residential and productive use in order to improve their
livelihoods. It is based on the willing buyer-willing seller principle in which the
government makes available a Settlement Land Acquisition Grant and a Planning Grant. Up to
mid-1998, land reform has succeeded in redistributing 191 912 hectares to 20 602
households and 111 902 people. In the process of land restitution, 26 454 people
have received 86 133 hectares.
3.6.7.3 In response to changing circumstances, we are in
the process of implementing the following:
3.6.7.3.1 the elaboration of policy on municipal
commonages, to give poor residents of rural towns access to land to supplement their
incomes. Municipalities will be assisted in converting commonages currently used for other
purposes, to use by their poor residents.
3.6.7.3.2 detailed policy and procedure for the transfer of
funds from the Department of Land Affairs to other tiers of government
3.6.7.3.3 comprehensive guidelines for detailing a
projected business plan aimed at implementing sustainable and environmentally friendly
land reform projects.
3.6.7.3.4 a grants and services manual detailing, among
others, procedures for the disbursement of grants.
3.6.7.4 Improved extension services and improved access to
finance will be essential to the success of land reform. The Land Bank has already
introduced innovative loan schemes to enable access to small emergent farmers.
3.6.7.5 The demand-led basis of the land reform programme
has encouraged applications from large groups who have themselves identified land, often
in isolated and relatively infertile places. Because of the numbers involved, these tend
to receive priority over smaller production-oriented projects which would be more likely
to increase employment and income. Increasing attention will be devoted to encouraging
production-oriented projects: we are currently supporting or investigating land reform
which is linked to the development of eco-tourism, horticultural crops and forestry
development. In addition, we are promoting ‘partnerships’ ate the provision of
start-up and small-scale equity products for SMMEs, and to expand the number of SMMEs
listed on the JSE.
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3.6.8.5 A range of special programmes are available to
SMMEs. While other programmes are being put into place, the Small and Medium Manufacturing
Development Programme (SMMDP), which offers cash grants to investments below R 3 million,
is meant to bridge some of the gap. It has been very successful, eliciting over 280 new
investments, and leading to the creation of 10 000 new jobs directly or 27 000
jobs indirectly. We are concerned that the programme still receives few applications from
previously disadvantaged groups and are putting into place more intensive promotional
activities. Both the Land Bank and the IDC have committed themselves to putting greater
emphasis on small and medium firm development and black empowerment in industrial
agricultural concerns: to this end a range of new products have been introduced.
3.6.8.6 The National Empowerment Fund (NEF) will be
financed from the proceeds of privatisation and direct government contributions. One aim
of the NEF is to support new black business development in industry. The Fund should have
a visible impact by 1999.
3.6.8.7 Ultimately, we will need to ensure that an
effective second tier in the banking system is developed, geared toward the provision of
debt finance in the range of R6 000 to R50 000 particularly. A discussion paper
has been issued by the DTI making recommendations in this regard.
Summary
3.6.9 To summarise we aim to generate employment
opportunities by expanding five key Special Employment Programmes in the short term, by
preserving sustainable jobs in vulnerable traditionally labour absorbing industries, by
fast-tracking movement into new labour absorbing industries and by creating an enabling
environment in which SMMEs may thrive. More attention will be devoted to promoting
employment through the development of services and ‘non-tradeables’.
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4.
Improving the Employability of Labour
4.1 Promoting a strong skills base, high rates of human
development and a well-functioning labour market are essential components of a strategy to
attract new labour-using investment. It is these same attributes that enable people to
more fully participate in the labour market by identifying opportunities, whether in
finding jobs or generating self-employment.
4.1.1 Education and Training
4.1.1.1 Professional Skills
4.1.1.1.1 The ‘apartheid wage gap’, a reflection
of structural, apartheid-based inequalities in access to education, training and jobs,
resulted in shortages of skilled personnel and an overabundance of unskilled labour.
Recent surveys have shown that this wage gap remains high. The skills shortage must be
addressed. It is a constraint on growth. Greater competition at the professional levels
should help to restrain top-end salaries.
4.1.1.1.2 Although the longer term solution is to increase
the numbers of locally-trained professional and managerial employees, in the short term a
more open skilled immigration regime should be developed to address the current shortage
of skilled labour.
4.1.1.2 Skills Strategy
4.1.1.2.1 The human resource development strategy, as
reflected in the Skills Development Bill, aims to create an enabling environment for
expanded strategic investment in education and training. The key elements include:
4.1.1.2.1.1 the promotion of partnerships in the
prioritisation, design and implementation of education and training to improve its
efficiency, responsiveness and quality
4.1.1.2.1.2 strategic planning for education and training,
informed by appropriate labour market information
4.1.1.2.1.3 the introduction of learnerships, which is a
more flexible alternative to the apprenticeship system, linking structured learning and
work experience
4.1.1.2.1.4 the establishment of a National Skills Fund
targeting the poor for training, with a focus on rural women, the youth and the unemployed
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4.1.1.2.2 New institutional and financial arrangements that
will be put into place to ensure the success of the strategy. These include the
introduction of a levy grant scheme, the National Skills Authority, Sectoral Education and
Training Authorities (SETAs) and Education and Training Boards (ETBs).
4.1.1.2.3 A special subsidy for skills development will be
considered within the SDIs. This fund should be used to identify skills needs in SDI
projects, facilitate in-service training, support the development of learning programmes
and design the institutional and funding strategies to support learning.
4.1.1.2.4 A learnership wage is proposed to encourage
increased training. This wage may also be linked to age in order to encourage youth
employment. The learnership wage is a developmental approach, with greater chance of
leading to future formal employment and less chance of enabling displacement of formal
workers.
4.1.1.2.5 The Department of Trade and Industry and the
Department of Labour are cooperating to pilot a skills programme in the clothing and
textile industries, valued at R5.6 million for one year. This tri-partite programme will
pilot industry-based ABE and skills training. The modules are being developed with a view
to facilitating process and technological change and the promotion of industrial
competitiveness.
4.1.1.3 The Education System
4.1.1.3.1 It is essential that all our people receive
quality education, that the quality of schooling is high, that education helps
school-leavers find jobs and that the educational system meets the needs of an
industrialising economy.
The Interface Between the Labour Market and the System
of Education
4.1.1.3.1.1 We aim to improve the responsiveness of
secondary and tertiary education to labour market needs. Interdepartmental work is
currently underway to improve this coordination. We will be emphasizing improvements to:
4.1.1.3.1.2 incentives to study in relevant
disciplines/subject areas
4.1.1.3.1.3 the teaching of maths and sciences in secondary
school
4.1.1.3.1.4 the delivery of careers services
4.1.1.3.1.5 information systems that enable decision making
The Distribution of Resources
4.1.1.3.2 It is widely recognised that there is a crisis in
the distribution of educational resources. While expenditure on education is high by
international standards, the poor allocation of financial and human resources results in
highly uneven teacher-pupil ratios, weak schools management, insufficient building
maintenance and low book and materials purchases. These issues are being attended to at
all levels of the education system.
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4.2 Improving the Functioning of the Labour Market
4.2.1 Labour Market Regulation
4.2.1.1 We have a segmented, multi-tier labour market.
Companies in some sectors and regions pay low wages and have poor working conditions;
others pay relatively well and aim for internationally competitive levels of productivity
and labour standards; and there are a wide variety of intermediate conditions. Much of
this differentiation has its origins in apartheid, especially its white labour preference
and its ‘homeland’ policies. Discrimination, especially on the grounds of race
and gender, remain widespread. We have a situation where many formal sector employers are
reluctant to take on new employees.
4.2.1.2 We remain convinced of the need to regulate our
labour market, especially to outlaw discrimination, introduce equity and guarantee basic
employment standards. Our Labour Relations Act provides a framework for collective
bargaining, regulates unfair dismissal, and promotes effective dispute resolution. Our new
Basic Conditions of Employment Act protects the rights of the most vulnerable workers,
lays down minimum conditions, and introduces more flexibility in the organisation of
working time. And our Employment Equity legislation aims to eliminate discrimination at
work and encourage a more representative workforce, and thus the more productive use of
our human resources.
4.2.1.3 But such regulation must always be appropriate and
sensitive to any negative employment impact. Together with our social partners, such laws
must be reviewed from time-to-time to ensure that they are sufficiently flexible and allow
adaptation to a continually changing environment. Work is changing, global conditions are
changing, and our laws must adapt to such changes appropriately. We intend to propose the
following amendments to labour legislation, which could lead to improved employment
outcomes:
4.2.1.3.1 amendments to the provision regarding the
extension of bargaining council agreements to non-parties. As the Comprehensive Labour
Market Commission recommended, not only should the representative position of the parties
be considered prior to their extension, but also the sensitivity of such agreements to
both non-parties and to job-creation. In practice we wish to see agreements which
accommodate the different circumstances faced by smaller businesses, various regions, and
different sub-sectors.
4.2.1.3.2 a focus on using the CCMA as a mechanism of last
resort, and encouraging aggrieved parties to exhaust internal channels before approaching
it. Our aim is to decrease the CCMA’s caseload and to enable it to perform more
preventative work.
4.2.1.3.3 a clearer outline of the probation concept
relative to the LRA’s unfair dismissal provisions, to ensure that employees do not
automatically gain full employment security before a reasonable trial period has elapsed.
In practice we want to encourage employers to take on new job-seekers and to make entrance
to the labour market easier for an initial period.
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4.2.1.3.4 as already announced, we intend to review certain
BCEA provisions once an analysis of its impact on small business has been finalised.
4.2.2 Active Labour Market Policies
Social Security
4.2.2.1 It will be essential to strike a balance between
poverty alleviation and improved efficiency in the economy. To this end, we propose to
improve the co-ordination of social security and welfare services so that they are more
cost-efficient, accessible and appropriate. This approach to social security focuses
beyond providing a safety net: it extends to that which enables continuous labour market
participation, prevents long term unemployment, reduces dependency, promotes human
development and encourages labour market efficiency. Special attention will be devoted to
vulnerable groups, particularly women, youth and the disabled. Such measures are
particularly important in a context of globalisation and economic restructuring.
Labour Market Information
4.2.2.2 The Department of Labour plans to transform its 175
local offices into Labour Market Information and Careers Services Centres. Already, the
Unemployment Insurance Fund (UIF) system has generated a substantial database on companies
and unemployed persons. We are currently developing a strategy to optimise these existing
resources in developing improved labour market matching systems. Ultimately, we aim to
ensure effective integration of this system with that proposed by the DTI’s BRAIN.
4.2.2.3 We will be seeking the assistance of business in
registering vacancies on this network and in assisting in the servicing of these centres.
We will be seeking the assistance of educational institutions in registering educational
opportunities on the system.
Social Plan and Labour Market Adjustment
4.2.2.4 Agreement has now been reached on the provisions of
the Social Plan. Establishment of Social Plan Technical Support Facility (SPTSF) to
provide assistance to ‘Future Forums’ which enable the facilitation of
‘early warning systems’ in preventing, and/or addressing adjustment related to,
retrenchments. The SPTSF will provide three types of assistance: sectoral studies where an
industry faces large scale retrenchments; referral to government support measures;
assistance to firms for the development of plans within an agreed framework.
4.2.2.5 Where retrenchments within a one year period are in
excess of 500 people or 10% of the workforce (whichever is greater), a company must notify
the Minister of Labour and may access assistance from the Department of Labour in enabling
labour market adjustment.
4.2.2.6 The Department of Labour already provides R108
million to unemployment training schemes, through the Provincial Directorates of the
Department. In addition, a National Skills Fund will be established, with an expected R200
million contributed from the budget in 1999. This Fund will grow in subsequent years and
will be financed from the skills levy from the year 2000. The social plan will link into
the National Skills Fund for retraining.
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4.2.2.7 The UIF will be reviewed to improve its support of
retrenchees, considering the possibility of: strengthening the link between unemployment
insurance payments, training and job search; and reducing the payments to contributors
resigning and sponsoring an increase in payments to retrenched contributors
Housing and Transport
4.2.2.8 Transport plays a key role in enabling job search,
affordable travel to work and services, and access to education. Yet, public transport
fares in South Africa are 32% higher than the world average, taking into account
purchasing power parity and subsidies. Currently 13% of urban residents cannot afford
access to any form of transport. Of these, 42% are school-going age children, and 45% are
unemployed, mainly township residents. Almost 30% of urban residents are
‘captive’ to public transport; about 17% are totally dependent on the cheapest
form of transport available. The Department of Transport aims to ensure that no more than
10% of disposable income is spent on transport: currently, about 1/5 of urban residents
spend more than this.
4.2.2.9 Currently, with long distances and low densities
causing low levels of capacity utilisation(22% on rail, 52% on buses, 48% on taxis); For
example, there is some concern that limited coordination with the Department of Housing
results in the establishment of housing projects built on low cost land, but far from
employment opportunities and social services: hence, the real cost of building is not
accounted for in planning activities.
4.2.2.10 A more coordinated and efficient approach to
spatial and land-use patterns will be pursued, emphasizing greater densification to
encourage the proximity of housing projects and social infrastructure to areas of economic
agglomeration: this approach should improve efforts at job search, reduce the cost of
transport to work, and enable better access to social services.
4.3 Vulnerable Groups
4.3.1 Women
4.3.1.1 Women are affected by direct and indirect forms of
labour market discrimination. Direct forms of discrimination place barriers to
women’s access to jobs socially considered to be ‘mens’ work’. Women
tend to have less favourable employment conditions, more often in casual, temporary or
part-time positions. These forms of discrimination often result in lower pay and lower
rates of unionisation for women. This leads to unequal access to benefits such as training
schemes and social benefits.
4.3.1.2 Indirect forms of discrimination against the full
participation of women in the labour market are related to the gender division of labour:
a disproportionate degree of domestic responsibilities fall on women in all types of
households. These responsibilities hinder the ability of women to effectively embark on
job search and reduce womens’ access to secure and equal job opportunities.
4.3.1.3 Limited affordable accommodation is available to
female work-seekers or workers in the urban areas. This is particularly important for
female-headed households not relying on the social support mechanisms of a nuclear or
extended family network. In such cases, women are particularly reliant on jobs associated
with 'tied housing' including domestic labour and agricultural labour.
4.3.1.4 We have made some strides in addressing the
position of women in the labour market. These include improved employment practices with
respect to maternity, improved access to training and the introduction of explicit
regulations governing the handling of sexual harassment in the workplace.
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4.3.1.5 We recognise that the situation for women in the
labour market could still be dramatically improved. In this light, consideration will be
given to:
4.3.1.5.1 improving access to training and accreditation
opportunities to unorganised and contract women workers
4.3.1.5.2 developing strategies to explicitly address the
perception of traditional work on the basis of gender. We will aim to raise a greater
awareness in disadvantaged communities to a wider set of vocational possibilities and
non-traditional role models
4.3.1.5.3 improving the accessibility of child care and
health services
4.3.1.5.4 addressing the lack of safe, affordable
accommodation for women as an ongoing challenge.
4.3.2 Youth
4.3.2.1 Youth unemployment is a serious problem: those aged
between 15-29 account for 28% of the population, but over half of total unemployment. Many
school-leavers wait years before getting their first job. It is essential to ensure that
young people find it easier to get into jobs and that a new generation of long-term
unemployed is not created.
4.3.2.2 The Department of Welfare will implement a pilot
skills development programme for youth to improve their capacity to access the job market
and contribute effectively to society by the age of 18 years. This programme aims, over a
15 month period, to build capacity in 80 communities, 60% of which would be rural or
semi-rural, reaching a minimum of 25 000 young people.
4.3.2.3 We are determined to address the problem of youth
unemployment and skills development through a bold package, with the support of our social
partners. Measures which need consideration in finalising such a package include among
others: a youth learnership wage, a youth training subsidy, appropriate probation and
employment security requirements, measures to avoid the displacement of existing workers
if new young employees are taken on, improved careers services in schools, internships,
and improved vocational training.
4.3.3 Disabled
4.3.3.1 The Integrated National Disability Strategy is the
responsibility of the Office of the Deputy President and seeks to ensure that disabled
persons are enabled to develop optimally. An investigation is currently underway to assess
the social security requirements of people with disabilities. Consideration will be given
to improving delivery in respect to the promotion of training and income generating
opportunities to the disabled through mainstream policy programmes.
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Summary
4.3.4 To summarise we aim to improve the level of human
development and the functioning of labour markets. To make the labour market more
efficient, we will make relevant amendments to labour market policies, improve labour
market information, formulate a more comprehensive approach to social security and
welfare, implement measures to enable continuous labour market participation, reduce the
cost of looking for and getting to work and implement special measures for vulnerable
groups. Improvements to the education system and the implementation of our skills
development strategy will be essential to the success of the ESF. These efforts will
enable people to participate more fully in the labour market, whether in finding or
creating jobs. At the same time, we will become a more attractive location for labour
absorbing investment, whether domestic or foreign.
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5. The Development,
Implementation and Monitoring of the ESF
5.1 The Establishment of a Cabinet Employment Cluster
Committee (CECC)
5.1.1 A Cabinet Employment Cluster Committee (CECC) will
be established, to be chaired by the Minister of Labour. This Committee will ensure that
government’s Employment Strategy commitments are met. A central function will entail
an ongoing review of the employment impact and potential employment enhancing measures of
all major policy areas. It will be responsible for improving policy coordination and
monitoring progress on key programme commitments. This committee will ensure that no
policies are passed through Cabinet without an assessment of their employment
implications.
5.2 Higher Spending on Employment Promoting Projects
5.2.1 Government will establish the Umsobomvu Trust with an
initial capitalisation from the proceeds of the demutualisation process. We will support
the Trust with further contributions from the fiscus. The income from this Trust will be
applied to key programmes in the Employment Strategy, focusing on a range of job creation,
training and youth employment oriented programmes. The business community, union
investment arms and the donor community will be requested to make supplementary
contributions to the Umsobomvu Fund.
5.2.2 Public Works Programmes will not be financed from the
Umsobomvu Fund, but will instead be allocated funds through the MTEF process. Government
has already dedicated about R1 billion in the current fiscal year, rising to about R1.8
billion by the year 2000/2. We will be committed to substantially increase the allocation
to the Special Employment Programmes: the actual amount will be determined through the
budgeting process.
5.3 Statistical Monitoring
5.3.1 The Cabinet Investment Cluster Committee (CICC)
is actively developing a database of new and intended investments in South Africa.
Ultimately, this database should enable us to track investment and therefore gain a better
understanding of the impact of different incentives on investment over the long term.
5.3.2 The Central Statistical Services (CSS) will
upgrade the provision of labour statistics by releasing two quarterly economy-wide surveys
of formal concerns, a quarterly household labour force survey to measure formal and
informal employment and unemployment and an annual survey of occupations at the
establishment level to monitor changes in the occupational structure. These surveys will
improve on the existing samples by widening coverage to all sectors, including
professional and business services, private health and community services, cultural and
recreational services and the personal services industries that are not currently covered.
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6. The Role of the
Social Partners in the Employment Strategy
6.1 An Overview of Government’s Commitments
6.1.1 Government is committed to the achievement of a
labour absorbing economy that relies on sustainable employment opportunities in the
production of higher value-added goods and services.
6.1.2 The Employment Strategy aims to improve both the
demand for, and the employability of, labour. Improved policy coordination to achieve a
critical mass of economic activity and maximise employment multipliers will be essential
to the Strategy’s success. A combination of short term and long term measures is
required: we must move to a longer term developmental trajectory and yet we recognise that
people need jobs now.
6.1.3 To improve the demand for labour, we
will:
6.1.3.1 create jobs directly through the strengthening of Special
Employment Programmes, with more financial resources, better coordination, more
regular flow of income and more emphasis on the building of sustainable assets. The key
programmes will include the Municipal Infrastructure Programme, Working for Water and
Community Based Public Works Programmes. Two new programmes will be introduced: the Clean
Cities Campaign and the Land Care Campaign.
6.1.3.2 preserve jobs in the private sector
by means of:
6.1.3.2.1 programmes to enable existing firms to shift into
higher value added, more competitive product niches and to adopt more competitive methods
of work organisation.
6.1.3.2.2 targeted interventions in mining, agriculture,
construction, and vulnerable sectors in manufacturing such as motors, clothing and
textiles, footwear and the petrochemical-plastics pipeline.
6.1.3.2.3 strengthen and refocus some of the existing
investment promotion policies and programmes. Some programmes have only recently
been introduced, but have already begun to show results. However, some of these programmes
will be under review in the coming year including the Manufacturing Development Programme
(MDP), the suite of SMME support services and key aspects of the NCPS.
6.1.3.2.4 fast-track movement into new labour
absorbing industries by:
6.1.3.2.4.1 improving attention to the promotion of
‘non-tradables’ and service industries
6.1.3.2.4.2 supporting the identification and promotion of
key labour absorbing industries, in agriculture, manufacturing and services
6.1.3.2.4.3 promoting cluster initiatives which enable the
identification of industry strategy initiatives, particularly in services
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6.1.3.2.4.4 promoting innovation in technology use and work
practices
6.1.3.2.4.5 leveraging investment into the South African
economy through the Industrial Participation Programme
6.1.3.2.4.6 reducing the cost of investing in productive
activities with the MDP, the SDIs and the IDZs, restructuring commercial transport
services and addressing key areas of crime.
6.1.3.2.5 Finally, SMMEs will be promoted by
way of:
6.1.3.2.5.1 establishing local business service centres,
which will be electronically integrated.
6.1.3.2.5.2 strengthening delivery in the financial
services sector, particularly in the lower end of the market
6.1.3.2.5.3 intensifying land reform and extension services
6.1.3.2.5.4 strengthening the implementation of local
economic development and local programme delivery
6.1.3.2.6 To strengthen the employability of labour,
policy will focus on education and training, improving the functioning of the labour
market and devoting special attention to vulnerable groups. A strong package of
‘active labour market policies’ will be introduced to strengthen labour market
matching and the skills base. We aim to:
6.1.3.2.6.1 Strengthen the availability of skills
by:
6.1.3.2.6.1.1 enabling easier access to work for non-South
African skilled personnel
6.1.3.2.6.1.2 transforming the training boards into SETAs
and the promotion of an impressive increase in private sector expenditure on industrial
training
6.1.3.2.6.1.3 augmenting skills and infrastructural
development through the Infrastructure and Employment Investment Programme
6.1.3.2.6.1.4 improving the interface between labour market
needs and the education system
6.1.3.2.6.1.5 improving the allocation of resources in
education
6.1.3.2.6.2 Improve the functioning of the labour
market by:
6.1.3.2.6.2.1 revising labour regulation where necessary,
in consultation with the Social Partners, to improve the criteria related to the extension
of agreements, to loosen provisions related to probation and to reduce the load carried by
the CCMA while increasing its preventative role
6.1.3.2.6.2.2 establishing a national network of Labour
Market Information and Career Services Centres to guide workseekers towards jobs
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6.1.3.2.6.2.3 formulating a more comprehensive social
security and welfare safety net
6.1.3.2.6.2.4 enabling adjustment through Social Plan
activities including the establishment of the Social Plan Technical Support Facility, a
review of UIF provisions to improve service to retrenchees, and by providing a social plan
fund to public sector retrenchees
6.1.3.2.6.2.5 improving coordination in the planning of
housing schemes and the provision of low cost transport services
6.1.3.2.6.3 Vulnerable groups will receive
special attention, by:
6.1.3.2.6.3.1 reducing direct and indirect
discrimination against women in the labour market by improving access to child
care services, accommodation in areas of economic agglomeration, skilling opportunities
and occupations not normally considered to be ‘women’s work’.
6.1.3.2.6.3.2 promoting youth employment and skills
development with the consideration of a discounted youth learnership wage, a youth
training subsidy, a temporary holiday from unfair dismissal provisions, measures to avoid
the displacement of existing workers if new young employees are taken on, improved career
services in schools, internships, and improved vocational training.
6.1.3.2.7 To fulfill the aims of the Employment Strategy it
is essential that improvements in public service delivery be achieved. The
reallocation of expenditure and of personnel to areas that add social value will require
the introduction of more flexible employment practices.
6.1.3.2.8 In all relevant aspects of policy, attention will
be devoted to improving delivery at the local level and improving overall coordination of
efforts to maximise the potential impact of policy. In particular, we seek to improve the
dynamic interface between the provision of infrastructure, information services, social
services, SMME support services and other economic strategies such as the SDIs, IDZs or
targeted industrial promotion activities.
6.1.3.2.9 To provide a vehicle for fiscal support of
innovative programmes aimed at stimulating employment, we will establish the
Umsobomvu Trust, to be capitalised initially from a charge on demutualisation.
These initiatives may receive further support from the Budget.
6.1.3.2.10 A Cabinet Employment Cluster Committee
will be established to ensure that government’s commitments are implemented and to
oversee a review of the key policy areas.
6.1.3.2.11 We must recognise that human and financial
resources are limited. We therefore challenge the Social Partners to join us in making
this plan work. More particularly:
6.2 We Challenge Business
6.2.1 We recognise the contribution made by Business to
social development, in the establishment of corporate responsibility and the contribution
to the National Skills Fund. We further challenge business to make a meaningful
contribution to employment promotion through demonstrable and tangible commitments to:
6.2.1.1 building capacity at the local level by
establishing a nation-wide "Managers Service Programme". Skilled professionals
would volunteer their time to assist in the development of capacity in local and
provincial government financial management, the development of Local Business Service
Centres, the Social Plan Technical Support Facility, schools management and upgrading and
public works projects.
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6.2.1.2 promoting education and training with a
"Schools Adoption Programme", which would systematically finance the upgrading
of schools and the purchase of books and materials.
6.2.1.3 funding partnerships in support of the programmes
of the Umsobomvu Trust and other employment generating initiatives.
6.2.1.4 promoting youth employment.
6.2.1.5 facilitating small business entry.
6.2.1.6 enabling progressive workplace change.
6.2.1.7 helping reduce conflict on the shop-floor.
6.2.1.8 addressing the need for improved trauma support to
survivors of violence.
6.3 We Challenge Labour
6.3.1 We recognise the contribution made by Labour to
social development and participative democracy. We further challenge labour to make
a meaningful contribution to employment promotion through demonstrable and tangible
commitments to:
6.3.1.1 contributing to the Umsobomvu Fund.
6.3.1.2 making it easier for young people to get into jobs.
6.3.1.3 wage bargaining appropriate to productivity gains
and rates of inflation and which does not contribute to job loss.
6.3.1.4 developing a realistic labour regulation framework,
which enables the restructuring required in both the public and private sectors and
supports an environment for employment creation.
6.3.1.5 helping reduce conflict on the shop-floor.
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7. Conclusion
7.1 To fight against unemployment is our central challenge.
And we want sustainable jobs. But we must be under no illusions. There are no magic
solutions and no quick-fixes. Unemployment is a deep, structural problem. New sustainable
jobs will not be generated overnight, at least not in the numbers we need. Fighting
unemployment will be a long haul.
7.2 As government we are focussing on getting the policy
environment right – including promoting growth, investment and the building of
infrastructure, pursuing sound macro-economic policies, improving the quality of our human
resources and revising a range of policies which may impact negatively on the employment
environment. And if we are to be successful we will need the help of our social partners,
and indeed of all organisations in our society. Business has a particular role to play.
Most jobs, now and in the future, will be in the private sector, in businesses large and
small.
7.3 This document presents some of the initiatives being
considered, or already underway, within government. Some are short-term, others long-term.
All form part of an employment strategy that must be made to work. If we pull together we
will succeed.
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Source: Department of Labour
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Last modified: 23 April 2008 07:16:14.
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