As presented to the Portfolio of Finance last week much has already being achieved by government since 1994 to reconstruct the economy in line with the broad social and economic objectives of government. Progress has also being made by government by way of its economic strategy to increase economic growth and development, price stability, balance of payments equilibrium and a more equitable distribution of income. There however still exists serious structural problems to be addressed, and this year’s budget must be evaluated against this background.

Although economic growth picked up during the last few years, this did not lead to more employment; in other words South Africa experienced jobless growth.

Employment creation in the economy decreased since the beginning of the 1990’s, especially in the formal non-agricultural sector. During the 1980’s employment by this sector was on average between 45 percent and 50 percent of the economically active population, and is currently just over 25 percent.

As the economy moved through its normal stages of development from the primary sectors such as agriculture and mining to the secondary sectors such as construction, manufacturing and electricity, and later to the tertiary service sectors such as trade, workers become structurally unemployed.

While investment in the declining secondary sector increased moderately, it did not lead to an increase in employment opportunities, but rather use was made of capital-intensive ways of production.

Labour productivity increased the last couple of years, but only because less labour was used in relation to gross domestic product, and not because workers actually became more qualified and therefore more productive.

These serious structural deficiencies require bold steps to correct it. The coming Job and Growth Summit would be an important step in ridding the economy of structural economic problems and FEDUSA wants to commend government on the attention that the Job and Growth Summit receives in this year's budget in anticipation of the Summit later this year.

The FEDUSA comments in this submission would focus mainly on the programmes of the Employment and Skills Development Services.

FEDUSA is very concerned that since the Launch of the National Skills Development Strategy (NSDS) during February 2001, no real tangible progress has been made, to make difference to the labour market with regard to new entrants less than 30 years of age. The strategy stipulate that objectives be measured during March 2005. March 2005 is only 24 months away. The National Skills Development Strategy will be judged on its delivery and not on fancy documents and speeches. Stakeholders and beneficiaries have the right to demand that they be empowered as millions of rands had been collected from employers. The Department of Labour and Seta’s have no excuse, but to deliver.

FEDUSA’s main focus area is specifically on assisting new entrants into the labour market. Both Departments of Education and Labour are really co-operating in this area. The Human Resource Development Strategy makes it clear that these two Departments should work together to bridge the gap between the "world of education" and the "world of work". Statistics shown that more than 300 000 learners leave the education system at grade 12, and many fail to find work, as they do not have the skills that are in demand in the labour market. They are therefore forced to join the already long queues of unemployed.

The Learnership objective of assisting new entrants into employment indicated that they hoped that - "By March 2005, a minimum of 80 000 people under the age of 30 have entered Learnership". This is a very critical objective and FEDUSA is of the view that this would really help to give poverty a body blow. By March 2002, (one year later since the Launch of the NSDS) only 3203 learners were busy completing their Learnerships, four months later the number of learners has increased to 7703. The majority of these learners were previously employed, not unemployed workers, school leavers or new entrants into the labour market.

The Department of Labour has failed in its endeavour to deliver in this area and this matter must be urgently addressed in order to avoid national embarrassment.

• The Portfolio Committee pay special attention to Section of 18.2 of the Skills Development Act, if we are serious about empowering our young school leaving learners.
• The new tax incentive be amended to a grant format that will be paid to employers up front and this should be monitored and controlled by the Seta.
• A more visual campaign is introduced to make role players and beneficiaries aware of the Learnership opportunities and benefits to learners. Learners have no information on Learnership opportunities because the Departments of Labour and Education have failed in their duty to properly inform the public.
• The Portfolio Committees of Labour, Education, the National Skills Authority and the National Board of Further Education and Training have an indaba of a few days to evaluate the non-progress of NSDS and the Human Resources Development Strategy. This evaluation should aim at removing blockages and making sure that delivery takes place at a much faster rate in order to create a better life for all.

The NSDS makes provision that by March 2005, at least 20% of new and existing registered small businesses to be supported in skills development initiatives and the impact of such support be measured. This is another area of the NSDS that is neglected by the Departments of Labour, Trade and Industry and Finance. It is so easy to provide support to a newly registered Close Corporation or Company. If the Department of Finance can follow-up on new companies that are registered to make sure they comply with tax laws, can the Department of Trade and Industry or Labour not follow these companies up with support that they require? Skills Development is one component to stimulate small business development, business start-up and growth of small enterprises. SMME’s need basic assistance and soft skills such as, access to credit, business support, advice and assistance with product development and design as well as marketing and exporting.

FEDUSA fails to understand why is it so difficult for government to create a one-stop service centre in provinces and rural areas, in order to stimulate small business development. It is amazing how entrepreneurs struggle to get off the ground with basic issues of start-up business. The reason why so many of them fail is because government does not provide assistance as far as support and development is concerned. Many workers have been retrenched and need to support their families. How can they fulfil this duty if there are not systems and processes in place that support them in starting up their own businesses?

FEDUSA further recommends that:

• Business centres be established to support the development and growth of small businesses.
• Develop of mechanisms to co-ordinate support activities once new Close Corporations and Companies are registered. (For example create a one-stop service centre in provinces and rural areas to stimulate small business development.)
• Make it easier for SMMe’s, by creating an environment that is conducive for business to flourish and thereby creating more jobs.

The CCMA is currently experiencing funding problems specifically when considering the caseload and the recent changes to the labour dispensation in the country. Although the CCMA gets 82% in 2003/04 of the Labour relations expenditure the growth in case management seems to exceed all expectations. FEDUSA, serving on the Governing Body of the CCMA, would like to call for an investigation into the allocated funding of the CCMA which seems to indicate areas of grave concern.

Another area of concern is the Strengthening of Civil Society fund and the way funds are allocated in terms this programme. FEDUSA believe that funding should be made available for training under the auspices of this fund with the relevant structure representing the civil society in tact. The current funding poses to be problematic and creates bureaucracy and problems of its own.

NEDLAC has been established as a bargaining mechanism to seek consensus on various aspects but the current system of funding also see ms to indicate underfunding when considering the range of agreements and legislation that NEDLAC has to deal with. It appears as an insider within the NEDLAC process that the financial status of this institution hampers delivery. NEDLAC would however, be in a better position to clarify issues pertaining to the financial standing of the organisation.

FEDUSA highlighted key concerns specifically related to Vote 17 for your consideration and deliberation.