Pretoria - About four million people in South Africa are dependant on the motor industry.
This was one of the findings of research conducted by economics consultancy Econometrix for the National Association of Automobile Manufacturers of South Africa (Naamsa) into the economic and socio-economic impact of the industry.
The report highlighted the vital and enormous contribution the industry has made to South Africa’s economy.
Rob Jeffrey, who compiled the report with Johannes Jordaan, said the industry had employed 443 219 people directly in the formal and informal sector in 2015, but that did not take into account the large number of jobs created in industries that were dependant on the automotive industry.
Jeffrey said their impact model showed that it supported more than 925000 employees in the formal economy, which could be multiplied by four to take account of all the dependants supported by the industry.
Job opportunities
He said the industry contributed an estimated R55.9 billion or 3 percent of total compensation of employees in 2015, with the report estimating that 76.3 percent of the job opportunities sustained by the industry value chain were medium- and low-skilled workers.
The report said the industry’s noteworthy contribution to employment of low-skilled workers should be viewed positively, given the high unemployment rate among low-skilled workers in South Africa.
It added that the industry spanned the primary, secondary and tertiary sectors of the economy and supported a wide range of businesses in South Africa, both upstream and downstream, along with adjacent industries.
“These upstream and downstream activities in the automotive value chain generate additional income and tax revenue, which in turn is spent in the economy, inducing further economic benefits,” it said.
The industry contributed 7.2 percent or R256.7 billion to gross domestic product (GDP) in 2015 and accounted for 10 percent of total manufacturing output in 2014 and 11.3 percent of total manufacturing sales in 2015.
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The report said the industry represented a significant part of the country’s manufacturing base and was one of the leading manufacturing subsectors. Between 2013 and 2015 the industry contributed R569.4 million towards training and skills development; R118.7 million to education; R346.6 million to healthcare; R306.7 million for small, medium and micro enterprise development; R13 million for conservation and the environment; R78.8 million towards social upliftment; and R115.6 million to sports and events sponsorships.
It stressed that government support of the industry was necessary because re-industrialisation was vital for the revival of economic growth and employment in South Africa; the automotive industry was a crucial job driver in the economy; and the industry made a significant contribution to the economy in terms of GDP, employment, compensation, government revenue, exports and capital investment.
Impact
Mike Whitfield, president of Naamsa and managing director of Nissan South Africa, said the automotive industry had invested more than R29 billion in South Africa in the past five years.
The report said the economy-wide direct, indirect and induced impact of the closure of the automotive industry in South Africa would result in the loss of 7 percent or R218.6 billion in GDP, R84.5 billion in compensation for employees, 588 453 formal sector and 81 953 informal jobs across all industries and result in a decrease of R43.6 billion in tax and import duties, R71.8 billion in exports and R31.9 billion in imports, while the trade deficit would increase by R40 billion.