INFORMATION
SERVICES: RESEARCH
19 February 2007
Labour and the 2007 State of the Nation Address
1. Introduction
The challenges faced by South Africa in eradicating
poverty emerge as the cornerstone upon which the 2007 State of the Nation
speech is based. From a labour perspective, this raises significant
implications for the linkages between poverty eradication and economic
empowerment through job creation. In this regard, the key themes that emerge
from the speech are the need to create good quality jobs en mass, to promote
the growth of the small and medium business sector, to speed up the process of
skills development and to implement programmes to ensure broad-based black
economic empowerment.
2. Summary of the labour-related content of the speech
2.1 Employment creation
The rate of growth of the economy over the course of
the past 2 years has been at an average of 4.5%, the highest since attaining
democracy since 1994. Over the past 3 years, the economy has created
approximately one and a half million jobs. In the period March 2005, to March
2006, 300 000 of the jobs created were in the formal sector outside of
agriculture, representing a growth rate of about 4%. A small part of these jobs
are those created through the permanent job opportunities as a consequence of
the Expanded Public Works Programme. Notwithstanding this, the President noted
the need to significantly improve upon this programme.
The number of employed people has been increasing at about half a million in
the past 3 years, with a steady progress in the advancement of black people in
the economy. In 1994, Black people owned just over 3% of market capitalization
of the Johannesburg Securities Exchange, this has since increased to about 5%
and the proportion of black people in top management positions has grown from
24% to 27%.
As far as accelerating the implementation of the Accelerated and Shared Growth
Initiative of South Africa (ASGISA), the Government will has set itself the
target of completing the process of reviewing the country's experience in
macro-economic indicators such as the Exchange Rate, inflation and interest
rates. This will be done with a view to putting in place measures that will
facilitate the growth of industries which produce tradables for both the
domestic and export markets and have the potential to absorb large pools of
semi-skilled workers.
2.2 Small Medium and Micro Enterprises (SMMEs)
The President noted that South Africa could do much better to create self
employment through small and micro enterprises. Given that the large majority
of the unemployed are youth, there is a specific need for interventions such as
the National Youth Service and the development of young entrepreneurs. The
following objectives have been set in this regard for implementation over
course of the next year:
·
The Government will take further practical action to improve access to
micro-finance including the reach of the Apex Fund (SAMAF) and the agricultural
micro-credit fund (MAFISA).
·
The Government will ensure the proper functioning of the Small
Enterprises Development Agency (SEDA).
·
The Companies Bill will be processed as part of the measures to reduce
the regulatory burden on small, medium and micro enterprises and to empower
minority shareholders and employees.
2.3
Further Education and Training Colleges
The progress made with regard to the recapitalisation of Further Education and
Training Colleges (FETs) has created an opportunity to significantly expand the
number of available artisans. Starting this year, resources will be allocated
to provide financial assistance to these institutions. The President noted that
questions pertaining to responsibilities between the national and provincial
spheres in the management of the FET system will be resolved as a matter of
urgency.
2.4 Youth development
The Government had set itself the target of increasing the number of young
people engaged in the National Youth Service Programme to 10 000. This has been
surpassed and the Government will now seek to increase this number by at least
20 000 through 18 Departments which have already developed plans in this
regard. Thirty thousand young volunteers will be enrolled in community
development initiatives and 5000 young people will be employed as part of the
Expanded Public Works Programme in the maintenance of government buildings. In
addition, efforts to integrate youth development into the mainstream of
Government work will be intensified. This will include a youth co-operatives
programme. The Government will also pursue ongoing efforts to link unemployed
graduates with employment opportunities.
2.5 Social security
The Report of the Committee of Inquiry into a Comprehensive System of Social
Security in South Africa (2002) showed that there is a need for a contributory
earnings-related social security system in South Africa because this is
currently lacking for large numbers of working people. The principle guiding
this approach is that over and above social assistance provided through the
government budget, there is a need to explore the introduction of an
earnings-related contributory social security system that is informed by the
principle of social solidarity. This will mean that all South Africans will
enjoy membership of a common administratively efficient social insurance
system, while those earning higher incomes will be able to continue
contributing to private retirement and insurance schemes. Elements of this
system would need to include:
·
Continuation of the minimum benefits contained in the social grants
system with benefits paid through a modern administrative system.
·
A wage subsidy for low-wage employees, possibly directed at first
entrants into the job market, especially young people.
·
A social security tax to finance basic retirement savings, death,
disability and unemployment benefits.
The
Minister of Finance will further elaborate on these issues in the Budget
Speech. Government will undertake a comprehensive process of consultation with
all social partners both individually and through NEDLAC in this regard.
3. Impact on labour
Aubrey Matshiqi argues that what has been delivered by the post apartheid
Government in the short period of thirteen years of democracy is unprecedented
anywhere in the world.1 Notwithstanding this, there is a need to acknowledge
that there are objective factors in both the domestic and global environment
that mitigate against the achievement of national goals at the desired pace and
scope. In addition to this, he argues that some of the failures in achieving
progress at the desired pace can be attributed to shortcomings in the policy design
process, policy content and policy implementation processes that are not
properly synergised. Whether this is true or not, it is worth using this
analytical framework to embark upon an reflective exercise to gauge to what
extent the policy design process, policy content and policy implementation have
negatively impacted upon the rate of progress in relation to job creation,
broad based back economic empowerment and speeding up the process of skills
development.
There is no doubt that notwithstanding economic growth, unemployment remains a
serious problem in South Africa, particularly for women, the youth and black
people. The pace of broad based black economic empowerment is still dismally
slow. Within this context, the labour sector needs to embark upon a structured
exercise of assessing its impact and identifying shortcomings and challenges in
related policy approaches. The public hearings hosted by the Portfolio
Committee on Labour in 2006 provided a platform, for the public to articulate
some of the pressing challenges in relation to the content and implementation
of labour policy. Some of the key issues to emerge in this regard are:
·
There needs to seriously review the efficacy of learnership programmes.
The fact that learnerships are often not sustainable and that many young people
do not find employment after completing them, needs to be urgently addressed.
There is a need to conduct an impact assessment of the extent to which
learnerships have led to employment over the course of the past five years
·
The Department of Labour needs to evaluate the implementation of the
National Skills Development Strategy on a regular basis and identify its
strengths and weaknesses.
·
SET As are not sufficiently impacting on job
creation in the way that they should be. This situation needs to be monitored
and addressed.
·
There is a need to identify the skills required for key sectors to
maintain and expand production. That means identifying both existing
bottlenecks and the training outputs required to maintain the sector by
replacing existing skills in the coming years. The Department of Labour must
ensure that qualifications and skills correspond with the needs of the economy.
·
There is a need to increase the number of graduates and to ensure greater
representivity among professional graduates as black people, especially black
women, are not adequately represented in these fields.
·
The tendency of employers to casualising and outsource jobs in order to
reduce remuneration needs to be monitored and curbed.
·
There is a great need for entrepreneurship education amongst young people
for self-employment. There is also a need to increase the access of young
people to finance for setting up SMMEs. Funding for early stage investments is
low in South Africa. It is important that startup initiatives receive seed
capital and there is a need to increase business development support.
·
There is a need to take stock of youth development programmes and consolidate
these.
·
There is a need to evaluate/ assess the impact of labour legislation.
The public hearings provided clear insight into what some of the challenges are
in generating job creation at a desired pace. As a matter of urgency, the
Department of Labour will need to reassess and revamp its skills development
strategies. These emerged as a serious point of contention during the course of
the public hearings. This, coupled with the fact that the Department was only
able to spend 57% of the National Skills Fund3 and the fact that many SET AS
did not meet their performance targets, provides the basis for serious
oversight in this regard. It is also important that given that the areas of
economic expansion and growth have not correlated with targeted areas of skills
development, that there is an urgent need for a study that addresses this
mismatch and highlights the areas where jobs are growing in the economy. This
data must then be used to realign skills development strategies, to improve
upon learnership programmes and to invest skills development resources in more
targeted, effective ways.
It is not only the need to create jobs that is important, but it needs to be
emphasised that the quality of jobs produced must also be an important factor
of consideration. For example, the Public Works Programme has been criticised
because it results in jobs that are of a short-term nature. The
extent to which this is true or not needs to be explored. In addition,
official definitions of employment include those who are employed on a casual
basis. Yet, the issue of casualisation has emerged as a serious point of
contention, particularly where employers opt to casualise workers to reduce
remuneration packages. This issue is potentially a red herring one and needs to
be addressed with tact and strategic visioning.
The growth of the SMME sector is critical to addressing unemployment and this
is arguably the sector of greatest opportunity for job creation. Yet, young
people report that experience problems in accessing funding and that mentorship
programmes and the support provided to them can be significantly improved upon.
Strategies for job creation, particularly amongst young people and the need to
implement broad based black economic empowerment more effectively need to be
critically reviewed and improved upon if the pace at which economic empowerment
takes place is accelerated.
References
State of the Nation Address, Joint Sitting of the South African Parliament,
Febraury 2007.
Annual Report Department of Labour, 2005/06.
Draft Report of the Portfolio Committee on Labour on Youth Development,
February, 2007.