Pretoria - South Africa's government will offer support to struggling companies in the auto sector and a rescue package for the clothing and textile industry, President Jacob Zuma said on Wednesday.
It will also set aside R2.4bn from the country's skills and unemployment insurance funds to help ease the strain on workers retrenched as a result of the global and domestic economic downturn.
Africa's biggest economy slumped into its first recession in nearly two decades this year, stung by a global crisis that has slashed demand particularly for manufacturing and mining products.
The automotive industry, one of the biggest in the manufacturing sector and a key employer, has been in decline for more than two years.
Zuma's office said in a statement, after a meeting of a task team set up late last year to respond to the crisis, that recent data showed the global slowdown was "biting deep in South Africa".
"Growing job losses and rising indebtedness required clear and purposeful action to respond to the needs of the people," it said.
Zuma told reporters key responses included offering support for distressed companies in the auto sector and a rescue package for clothing and textile companies.
Government would also increase incentives for the manufacture of capital equipment, transport equipment and fabricated metals linked to the multi-billion rand infrastructure development programme.
The state-owned Industrial Development Corporation would make available R6bn over two years to deal with the effects of the crisis, he said.
The state and its utilities, including power group Eskom, plan to spend R787bn over the next three years to boost infrastructure.
Economic Development Minister Ebrahim Patel said the trade and industry department would give specifics on the auto sector support and the textile rescue package within the next two weeks.
The help may have conditions, though, such as limits on executive pay and shareholder returns, he said, without giving more details.
South Africa's clothing and textile industry has suffered for a number of years, initially from cheaper imports from China and now the economic downturn, with thousands of jobs at risk.
Zuma said a training layoff scheme - first mooted in his state of the nation speech in May - would offer an alternative to retrenchments.
Under the scheme, the government would pay half a worker's basic pay, up to R6 239 rand a month, for companies to train affected employees. This would only be for workers earning less than R180 000 a year.
The money would come from the National Skills Fund and the Unemployment Insurance Fund, which companies and employees pay levies to. Additional money would come from existing industry training institutions, that are also fundied by levies.
Trade unions, which have heaped pressure on Zuma since his inauguration in May, through strikes and other demands for policy change, said they were happy with the measures proposed.
"We are very happy about the progress that has been achieved," Zwelinzima Vavi, general secretary of labour federation Cosatu, said.
"Government has come seriously to the party, driving the process at the highest level."
- Reuters