Govt eyes 14% unemployment rate by 2020

Cape Town - South Africa needs to take tough decisions involving compromise and trade-offs, according to the revised National Development Plan (NDP) handed to President Jacob Zuma on Wednesday.

The document contains recommendations to government by the National Planning Commission (NPC) on how to tackle the country's challenges over the next 20 years.

Key proposals on the economy and employment include raising exports, while taking steps to prevent excessive overvaluation of the currency.

The 484-page document also calls for improving skills development, and breaking disincentives to hiring young people, as well as increasing competition and breaking monopolies.

The NDP also says there is a need for the high cost of transport and logistics to be addressed, in a bid to tackle spatial divides.

It also focuses on strengthening the social wage in order to raise the living standards of the unemployed and those with lower paying jobs.

"Rising rates of investment will be achieved initially through state spending on infrastructure. The focus needs to be on infrastructure that promotes efficiency in the economy, and reduces costs for business and for individuals."

Labour market reforms are included in the NDP, but no drastic overhaul is suggested. Proposals on reducing tensions in the labour market are modest.

The public sector is the largest employer and the plan recognises the damage the current manner of managing disputes in essential services, such as health, education and policing, does not foster productivity.

"The current system neither discourages strike action, nor inspires confidence in other ways of addressing disputes and grievances.

"The determination of appropriate sanctions are required where essential services and minimum service level agreements are not upheld.

"Similarly, expectations of the state as employer to implement agreements on wages and conditions are required, and appropriate sanctions set where these are not implemented timeously."

Among the NDP's more ambitious targets is decreasing unemployment to 14% by 2020, and 6% by 2030. The plan says this could be achieved through the promotion of employment in labour absorbing industries.

"Some 90% of jobs will be created in small and expanding firms."

In order for this to happen, regulatory reform would be needed to drive entrepreneurship, and the cost of doing business would have to be lowered.

The NDP also proposes some short- to medium-term interventions on how the country should respond to the current global economic crisis.

"Government needs to build in macro-policy to enable South Africa to counteract the effects of the financial crisis," it states.

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