Building a social compact for jobs

A historic milestone in the partnership between government, labour, business and community has yielded a broad range of measures to create and protect jobs – and bring hope and opportunity to South Africans who need it the most.

This past week’s Presidential Jobs Summit, convened under the auspices of the National Economic Development and Labour Council (Nedlac), was the platform from which our nation’s social partners answered the call of the people of South Africa for decent work.

Our response took the form of a framework agreement that will confront the greatest challenge facing our country at this moment in its history: unemployment.

We should therefore all take heart from the estimate that the initiatives agreed by the social partners will create approximately 275,000 jobs a year – over and above the jobs that would have been created without these interventions, which was on average about 300,000 a year over the past four years.

The extreme unemployment in this country is the product of an economy that for several decades has been starved of any meaningful investment in its human capital, where most people have been denied the opportunity to own assets or develop skills.

The structure of the economy, which was built on the extraction of minerals, where ownership and control are highly concentrated, remains largely untransformed.

Low levels of growth in recent years has further undermined our efforts to overcome the economic legacy of apartheid.

Our economic performance has also been undermined by state capture and corruption in both public institutions and private companies.

Since the announcement of the Jobs Summit in the State of the Nation Address in February, all social partners have been engaged in intensive discussions to craft an ambitious and realisable agreement to begin to address this crisis.

As a critical starting point, our focus is on both creating new jobs and retaining existing ones.

There is agreement that all possible alternatives and opportunities need to be explored before retrenchment is considered, including executive salary sacrifices and the foregoing of dividends.

For the economy to grow and for jobs to be created, it is essential that there is a substantial increase in domestic demand.

This means that South African companies, government and consumers must buy local.

The most direct way for South Africans and South African companies to create jobs is to buy only South African products.

Government has undertaken to simplify and speed up the process for the designation of products for local procurement, and organised labour, in partnership with Proudly SA, will proactively identify opportunities for new designations.

While promoting local demand, social partners have also identified the need to more aggressively promote South African exports.

We will embark on an export drive that prioritises manufactured and processed goods, ensuring that we derive the full employment benefit of our mineral and agricultural resources.

We will seize the opportunities presented by regional integration and the establishment of an African Continental Free Trade Area to produce more goods for other African markets.

Through this framework agreement, we will be mobilising finance on a far greater scale, ensuring that it is focused on building our manufacturing capacity.

The financial sector, as part of its transformation code, will invest R100 billion over five years in black-owned industrial enterprises.

The social partners have agreed on strategic interventions in economic sectors that have great potential for growth and even more potential for employment creation.

The agriculture and agro-processing value chain, as set out in the NDP and the nine-point plan, is one area that has significant potential.

It is estimated that global demand for fresh produce could increase South Africa’s horticultural trade from R54 billion to R90 billion by 2030.

Through our programme of accelerated land reform, we will expand the area of land under cultivation, substantially increase the number of people productively working the land and provide rural dwellers with the ownership and tenure rights needed to unlock the economic potential of their land.

In the metals, mining and machinery sector, government has agreed to expeditiously finalise an export tax on scrap metal and ensure better access to incentives like the Downstream Steel Industry Competitiveness Fund.

Other value chains that are receiving focused attention include sub sectors of the manufacturing industry in clothing, textiles, leather and footwear, furniture and the automotive industry.

One of the most exciting prospects to emerge from the deliberations that led up to the Jobs Summit is that organised labour, through one of its member unions, plans to open a union-owned clothing factory in the Eastern Cape within the next two years.

This innovative and welcome initiative will create around 100 jobs initially and aims to contribute to the re-industrialisation of a province which suffers from widespread poverty and unemployment.

One of the country’s greatest potential strengths is our young population, whose capabilities and talents the social partners are committed to develop as a matter of priority.

A specific area of focus is the development of the technical skills that are required in the industrial economy.

Mechanisms are being put in place to enable companies to form partnerships with nearby TVET colleges, where the colleges offer the theoretical component of the programme and companies offer the practical and workplace components.

The outcomes of the Jobs Summit and the actions set out recently in our stimulus and recovery plan for the economy give us renewed hope in our ability, as South Africans working together, to develop solutions to seemingly intractable problems.

The Jobs Summit was the beginning of a process that brings all South Africans together to cooperate and to work together for a common vision – a growing economy in which the benefits are shared by everyone.

By President Cyril Ramaphosa

Posted in Phambili
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