JOHANNESBURG - President Cyril Ramaphosa has promised that the government will work with social partners to finalise an economic recovery programme to protect and create jobs as unemployment continues to rise to record highs.
Ramaphosa said in his weekly newsletter yesterday that the government would fix the fundamentals of the economy, pursue new sources of growth, and ensure that its actions were underpinned by a capable state.
He placed infrastructure investment in capital projects at the centre of the government’s economic recovery plan.
Ramaphosa said the government would work with social partners to speed up the pace of implementing reliable energy, access to broadband spectrum, competitive ports and efficient transport.
“The most important part of that programme must be the protection and the creation of jobs,” he said.
Today, Statistics SA is expected to release the country’s employment print for the second quarter.
Unemployment breached 30percent for the first time on record in the first quarter, as the economy was already in recession before the Covid-19 pandemic wrought more devastation.
Recent economic indicators show a drastic decline in activity and in business and consumer confidence to historic levels due to uncertainty regarding the economic impact of the Covid-19 pandemic.
Ramaphosa said the path to economic recovery would be long and difficult.
“This is not the time to despair but to act. It is untenable and unacceptable to live with an unemployment rate of 30percent, which will soon increase,” he said. “It is also impossible to build an economy built on inequality.”
Trade, Industry and Competition Minister Ebrahim Patel last week announced plans to prioritise saving firms and jobs.
Patel said the department’s wider plan included investment in infrastructure-driven growth through building bridges, roads and clinics.
The economy was forecast to contract by at least 7.3 percent this year, its largest decline in 90 years, and millions of jobs were expected to be lost. Economists have forecast a significant decline in private sector investment this year.
Investec’s Kamilla Kaplan said the recession and the deterioration in the fiscal position would yield a 19.8percent year-on-year decline in fixed investment this year.
Kaplan said a key downside risk to private sector investment plans included increasing debt levels, and the associated potential for corporate defaults, business failures, as well as rising cash flow pressures.
“Business failures and the possibility of structural changes in business behaviour could lead to longer-lasting global supply chain disruptions,” Kaplan said.
“A more favourable economic growth climate would be supportive of increased private sector investment.
“A commitment from the government to make headway with its infrastructure programme, and attaining consensus on the implementation of reforms, would also translate to increased capital expenditure.”
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