Cape Town - Finance Minister Pravin Gordhan on Wednesday painted a bleak
picture of South Africa's job crisis, saying the tentative economic upturn would generate only about a million jobs by 2014.
Delivering his maiden Budget to parliament, Gordhan identified
putting young people in jobs - in part through a two-year wage
subsidy - as the state's top priority in terms of improving
economic growth and reducing poverty.
Gordhan said a 2.3% growth forecast for the year was not
enough to address massive job creation challenges, which include
youth employment nosediving by 13.6% last year, so that
almost half of young South Africans do not have work.
According to his 2010 Budget Review: "Job creation is likely to
be weak in the short term. The moderate recovery outlined in the
Budget is projected to create just over one million jobs in the
next five years, and would result in only a marginal decline in the
number of unemployed people and the unemployment rate by 2014."
Gordhan conceded that the government's R846m
infrastructure investment programme aimed to create "4.5 million
short-term job opportunities" over the next five years.
He told parliament: "The most urgent focus of policy change must
be interventions to put young people to work."
He said government was mulling a "cash reimbursement to
employers for a two-year period, operating through the Sars [South African Revenue Service] payroll
tax platform, and subject to minimum labour standards".
The subsidy would be available to companies, non-governmental
organisations and municipalities.
Treasury said the state believed about 800 000 young people would
be eligible for the subsidy, and that it would create another half
a million jobs in the 18 to 24 age group over three years.
Treasury officials said there was no funding allocated for the
measure in the current expenditure framework, as the wage subsidy
model has yet to be completed.
A policy paper is expected to be unveiled at the end of February, but funding for the subsidy will only be part of Gordhan's
next annual budget.
"The youth subsidy will not eradicate the problem, but it will
go a long way towards helping the situation. Jobs are central. If
you put another million people on the streets, our social fabric
will be torn apart," a senior treasury official said.
Unemployment among South Africans between the ages of 18 and 24
stood at 48.2% in December, nearly double the national
average of 24.3%. Three-quarters of all unemployed people
are under the age of 35.
Gordhan blamed the problem on employers' reluctance to hire
inexperienced people, the lack of skills of South African school
leavers, and trade unions' demands for high entry-level wages.
"Furthermore, our bargaining arrangements push up entry-level
wages, pricing out inexperienced work-seekers," he said in his
first annual Budget speech.
The other main tool for job creation would be encouraging
labour-intensive industries and supporting investment in
sustainable technology to create so-called green jobs.
"This must play a part in out new growth path."
As part of the revised industrial policy action plan, government
planned to come up with new funding support packages for the ailing
automotive industry, and the textile and clothing industry.
The extent of the funding would be announced in the course of
the year.
The budget overview mooted "regulatory reform" to make labour-intensive industries more competitive, in one of several
recent hints by the Zuma administration of labour law changes.
The budget forecasts that the state's critical infrastructure
programme would create 62 097 jobs - of which 27 914 would be in
construction.
Statistics have confirmed that 870 000 jobs were lost last year,
527 000 of them unskilled or semi-skilled positions, and that South
Africa now has 1.7 million discouraged work seekers.
The state paid out R2.8bn in unemployment benefits to
nearly half a million claimants in 2008/09, and the Budget
forecasts the figure will "increase substantially" in 2010/11.
The department's revised budget for unemployment benefits is
R3.8bn for 2009/10, and R4.2bn for 2010/11. It is set
to increase by nearly R600m a year for the next two years.
- Sapa