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Cape Town – South Africa needs to seek opportunities over and above ‘status quo’ sectors like mining to unlock growth and job creation, according to a McKinsey report.
On Tuesday, McKinsey Global Institute released its latest report on South Africa entitled 'South Africa's Big Five: Bold priorities to unleash inclusive growth'.
Co-author of the report and a partner at McKinsey’s Johannesburg office, Christine Wu, told Fin24 the projected employment outlook in the mining sector is negative.
“According to the data from gross domestic product and jobs multipliers (direct and indirect) and sectoral GDP/job data (data on the number of jobs per R1m of GDP output), job creation from mining is lower than other sectors,” Wu said in an email.
The negative outlook, said Wu, is also based on the well-publicised likelihood of further mechanisation within the sector.
On Monday, the SA mining industry, unions and the government signed a broad plan to stem a wave of job losses triggered by falling commodity prices and soaring costs.
READ: Huge focus on platinum in SA mine jobs plan
According to Mines Minister Ngoako Ramatlhodi, almost 12 000 mining jobs are on the line.
While SA needs to look to other opportunities to "unlock a step change in growth and job creation", Wu said a healthy mining industry would still be essential for exports.
At present the mining sector is still crucial for the South African economy, accounting for 8% of GDP.
The sector would continue to play a shaping role in unlocking "globally distinctive capabilities" in other sectors, such as manufacturing, construction and engineering services, according to Wu.
The report emphasised that SA would benefit from a balanced economy, while not being overly reliant on any sectors.
The '5 Bold Opportunities' to grow the economy include advanced manufacturing, infrastructure productivity, natural gas, service exports, and agricultural transformation.
According to Wu the “big five” represent opportunities “over and above” the status quo.
“This trend is in line with that of the last 20 years, where the South African economy has diversified significantly away from basic materials,” Wu said.
