THERE's something sad about the action plan drawn up by an SA team of labour, business and government as a response to the international economic crisis. The plan, which aims mainly to preserve and create jobs, had hardly been released when news of new retrenchments broke.
I-Net Bridge reports that the bulk of the 19 000 job cuts announced by Anglo American on Friday is likely to be in SA. Subsidiary Anglo Platinum's workforce is going to be cut by 10 000.
Soon afterwards it was announced that Lonmin, the world's third-largest platinum producer, would shed 5 500 jobs at its Marikana and Limpopo operations.
The planned retrenchments are a stark reminder that the grandiose 25-page plan, entitled Framework for South Africa's Response to the International Economic Crisis, will probably do little concrete to save and create jobs on the scale envisaged.
True - some elements, such as the extended public works programme, can play a role. But though the framework document provides a lot of detail on the public works programme, it really is nothing new. This programme comes from government and is costed in the national budget.
It didn't require urgent meetings by a special task force comprised of top-level representatives from labour, business and government.
Decent work dilemma
A question that begs to be asked about the public works programme is to what extent this can represent the "decent work" that the ANC - egged on by labour - set as a priority in its election manifesto. The word "decent" is used to imply certain salary scales and levels of labour protection.
Though the document does not say this, it's well known that the public works programme doesn't pay participants the equivalent of a public sector wage. It seems when it comes down to hard practicalities, the ideals of "decent work" are more difficult to deliver.
There is a lot of talk in the document of "rescue" and aid to "distressed" sectors in the economy. We've already seen in the budget that Finance Minister Trevor Manuel resisted the calls for aid from central government.
SA simply can't afford bailouts on the scale that we have seen in the US. One imagines that, within the task team, there was a lot of pressure on government to respond by doling out cash.
Instead, it seems the cash will come from the Industrial Development Corporation (IDC). A number of vulnerable sectors have been identified. These are: clothing, textiles and footwear, mining and the auto and capital equipment sectors.
The document says "sector-specific strategies" will be drawn up to address the problems, with the "urgent" and "focused" use of "a combination of trade, industrial and social policy measures to prevent job losses and regain jobs and productive capacity lost in the recent past, and to promote employment creation".
That is a mouthful. But the only concrete measure that can be discerned is that the IDC will come to the rescue, by increasing its equity exposure to these sectors and making increased working capital available to firms "in large, labour-intensive sectors".
IDC to save the nation
Something more concrete may emerge, as special task teams will draw up "rescue packages" for affected industries in four weeks. It seems highly unlikely that this deadline will be met. Moreover, as we have seen with the mining industry, these grand plans may be a pipe dream when it comes to the harsh realities of steering a business through the current desperate times.
There's also a confusing aspect about the document when it comes to which sectors are being specifically targeted. It mentions the above list, but then goes on to say that other parts of the economy with high levels of employment have also been negatively affected, such as retail, housing construction and private services.
It's not entirely clear if they will also benefit from help from the IDC. Small business is also mentioned. The question is whether there will be enough cash to go around.
Another question that needs to be addressed is the distinction between businesses in distress due to their own inefficiency, and those suffering as a result of the economic climate. For industries such as clothing and textiles, this will be a difficult distinction to draw.
The document notes that the industries have to draw up turnaround strategies. In the case of clothing and textiles, we have been waiting for turnaround strategies for years in vain.
Perhaps the task team that drew up the document served a purpose in that it gave government the opportunity to convince business and labour that certain things just can't be done - such as massive fiscal bailouts of industry.
There is much talk of searching for additional resources, but my guess is that this won't be found in the budget. And, as the ongoing announcements of retrenchments are showing us, the grand plans will do little to stave off calamity in some sectors.
- Fin24.com