Lower wages vital for jobs growth

Cape Town - Government's plan to hammer out a new economic growth path for South Africa will be a non-starter unless it involves lowering wages, says Cape Town economics Professor Brian Kantor.

His comment follows a high-level meeting between the provinces, Minister of Trade and Industry Rob Davies and his Cabinet colleague in charge of economic development, Ebrahim Patel on Thursday. The aim is to inform provinces of the work being done to forge a new, labour-absorbing economic growth path for the country. This has been Patel's main focus since his appointment to Cabinet last year.

Davies, who updated the meeting on the implementation of the Industrial Policy Action Plan (Ipap), said this plan could not simply be a re-packaging of existing programmes. It has to deliver "more labour-intensive outcomes". Patel used the occasion to stress the importance of implementing the plan and related projects.

"Jobs must be at the centre of our common national goal," said Patel, who's busy preparing a provincial matrix identifying job opportunities, their cost and the number of permanent jobs.

Kantor said, however, unless government is prepared to reduce labour costs, any plan to increase economic growth will be dead in the water.

In anticipation of Cosatu's complete opposition to this kind of change, which may mean that government would not consider it as an option, Kantor added: "These people live in a fantasy world if they blieve there's no relationship between labour cost and employment."

While Patel's work on the new economic growth plan will inform Cabinet's July lekgotla where work priorities for the next year will be hammered out, Finance Minister Pravin Gordhan will give input based on deliberations at the G20 summit currently being held in Toronto. A key focus of these talks will be unemployment which, according to the draft communiqué, remains unacceptably high and therefore poses a risk to the "uneven and fragile" recovery.