Last month, Statistics SA announced that the unemployment rate in the first quarter of 2017 had spiked by 1.2 percentage point to 27.7% - the highest since September 2003.
A few days later, on June 6, the same Stats SA announced that the country’s Gross Domestic Product (GDP) contracted to -0.7% in the first quarter of 2017 - placing the country in a technical recession.
While the manufacturing industry contracted by 3.7% and contributed -0.5 percentage point to GDP growth, only two sectors recorded an increase in economic production. Agriculture recorded 22.2%, contributing 0.4% to the overall GDP. Mining grew by 12.8%, contributing 0.9% to GDP.
Against this reality and the fact that some major multinational corporations are disinvesting from our shores, with General Motors being the latest to shut shop, it is evident that the economy has reached boiling point and cannot afford to contract further.
Young people, our largest segment of the population, are the hardest hit by the job crunch and there’s a clear and present danger that their frustrations could soon spill over into lawlessness.
In such difficult times, those entrusted with making and implementing the country’s policies should do all they can to minimise further shocks to the economy.
Interventions should therefore be aimed at making our already vulnerable economy more attractive to investors instead of chasing them away. As it begins its policy conference, this is the reality that faces the ANC. What this means is that discussions on the economic policy must focus on finding solutions to declining economic growth and high unemployment.
As the governing party, the ANC has to ask its deployees - especially those at national level - whether they are championing policies and interventions that increase rather than kill jobs.
Regulations by the Department of Health to ban alcohol advertising, impose a tax on sugary beverages and to remove labels on cigarette packaging - over and above excise taxes - are a clear threat to jobs in the industries affected.
The Lesedi Local Municipality, of which I am mayor, is one of the many towns and regions around the country that will suffer irreparable economic harm and experience major job losses if these regulations become implementable programmes of the government.
Residents of Heidelberg, which is the seat of the municipality, rely heavily on a manufacturing plant that has provided them with sustainable jobs. But why would anyone care about the impact that national policy has on a small, “insignificant” municipality when the country faces bigger problems?
Well, let me explain why you should care. Lesedi Local Municipality is located off the N3 highway, some 55km south-east of Joburg. Those who often make the trek down to Harrismith and Durban using the N3 highway normally give its main town of Heidelberg a passing glance or stop over for a quick petrol refill.
But there’s more to Heidelberg and its surrounds than just a holidaymaker’s pitstop on the way to the coast. It’s a manufacturing and agro-processing hub where some of the country’s most beloved cold meat products are made.
Popular breakfast sausages, bacon, cooked ribs, burger patties and other cold meats are produced at the Eskort Pork Abattoir on the outskirts of town.
Beef producer Karan Beef’s largest feedlot in the southern hemisphere holding 100000 head of cattle is also found in this area.
Tobacco giant British American Tobacco (BAT) has a manufacturing facility - a 35-hectare plant that is also the largest in the southern hemisphere - in Heidelberg.
These companies employ a sizeable portion of the 110000 inhabitants of the Lesedi Municipality. The area relies heavily on the contribution of manufacturing, its largest economic sector that makes up 38.8% of the Gross Geographic Product.
To paint a picture of how important manufacturing is to this municipality, let us take a closer look at its geographic composition, population and economic participation levels.
Heidelberg and Ratanda form most of the urban concentration on the western part of Lesedi; while Devon and Impumelelo on the eastern edge make up most of the agricultural space. Blacks account for 77.29% of the population, followed by whites at 19.66%.
As is the norm around the country, the distribution of wealth and income has been grossly skewed by years of distorted development that mirrored apartheid spatial planning. The area has a 25% unemployment rate. What this means is that sectors that create employment - manufacturing, community services and financial services - must be supported.
Small and medium enterprises (especially those located in the township), co-operatives and community development projects that have the capacity to make a dent in poverty must also receive some form of backing.
The municipality has adopted a local economic development strategy that focuses on increasing growth and generating more employment opportunities.
In 2013 Lesedi contributed R4.5billion to the total production output of the province. This equated to just over 10% of the total output of Sedibeng and 0.49% to the total output of the provincial economy.
This might seem like a drop in the ocean but it is a significant economic contribution when one takes into account that Lesedi makes up less than 1% of the population of Gauteng.
That means it is punching equal to, if not above, its weight in terms of production output.
To ensure even further growth, conditions have to be such that more investment can be attracted to the area. New investments are of course the first prize, but big business operating in Lesedi cannot be neglected and must be encouraged to stay and expand their operations.
But for this to happen the province and the national government must not constrain smaller municipalities by proposing policies and regulations that hamper rather than encourage investment, economic expansion and job creation.
It is for this reason that as a municipality we are extremely worried about the impact on our economy if the proposed legislative change aimed at introducing plain packaging for tobacco products is enacted. From what we have been able to gather through our interactions with big business, the tobacco giant will be forced to close the plant if the proposed bill becomes law. This manufacturing plant has been in Heidelberg since 1976 and is an integral part of the spatial and economic landscape of our small town.
It is also a valuable corporate partner with the municipality.
Its closure would have disastrous consequences for the local economy, job creation and, more importantly, municipal revenue. The plant employs 1100 people, many of them from surrounding areas.
These employees support their immediate and extended families, and prop-up their local formal and informal economic sectors.
The ripple effect of the closure of the plant on their families and community is too ghastly to contemplate.
Apart from employing locals, about 155 staff members of Fedics catering, the company that runs the canteen inside the plant, and Tsebo facilities - a township-based enterprise that provides cleaning services - will also lose their livelihood. Local contractors that do gardening, electrical work, painting and general maintenance would most probably also have to let go of a significant portion of their workers.
It would be self-defeating as a country if in addressing public health objectives, we place in jeopardy thousands of jobs in an area that badly needs them.
Let us not allow national policy interventions - no matter how well intended - to deprive smaller towns and their inhabitants of their main livelihood.
* Maloka is the executive mayor of Lesedi Local Municipality
** The views expressed here are not necessarily those of Independent Media.