Job-creating growth not on the cards yet

Unemployed SA citizen at the contruction site in Newtown Johannesburg.photo by Simphiwe Mbokazi 453

Unemployed SA citizen at the contruction site in Newtown Johannesburg.photo by Simphiwe Mbokazi 453

Published Feb 28, 2013

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Ethel Hazelhurst

Job-creating economic growth of 5 percent a year is not on the horizon. The Budget Review, released yesterday, said “robust investment spending and rising exports” would lift economic growth from 2.7 percent this year to 3.5 percent next year and 3.8 percent by 2015.

“Additional electricity supply from new power plants coming on line, water supply and rail capacity upgrades, strong regional growth, stable inflation and relatively low interest rates will also support higher levels of growth.”

But the growth projections fall far short of what is needed to address an official unemployment rate of about 25 percent.

The government’s plans, announced two years ago, to create 500 000 jobs a year would require growth of about 7 percent.

Given the failure of the economy to come anywhere near this figure, employment growth is expected to be only “moderate” over the next three years.

The review said total employment was still 450 000 below pre-financial crisis levels. At present 4.5 million South Africans are jobless and another 2.3 million are classified as discouraged because they no longer seek employment.

Last year few jobs were created, with only 82 000 jobs added between September 2011 and September 2012. And the environment worsened with threats of retrenchments by major mining companies.

This came as the mining sector experienced a 3.1 percent decline in output last year, after widespread labour unrest halted production.

The review recorded notable production declines during the year in copper (21.8 percent), gold (14.5 percent) and platinum group metals (12 percent).

The disappointing performance spilled over into other areas as the sector has strong ties to industry and is a strong contributor to corporate tax and export revenues.

The sector’s potential to contribute more to the economy depended on higher rates of investment, the review said. And it noted that planned mining investments over the next two decades were low compared with other commodity economies.

It went on to explain the deficiency.

“Investment requires a supportive policy climate.

“The National Development Plan argues for certainty of property rights, a stable regulatory framework, particularly for licences, securing reliable electricity and rail transport, deeper links with other sectors and a focus on research and development to improve extraction methods, boost energy efficiency and find new uses for minerals.”

The remarks could usefully be brought to the attention of some government ministers and high-ranking ANC officials. Recent events and statements on a number of these issues would have given investors little comfort.

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