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State moots fund to tackle jobs crisis

Feb 08 2011 16:04 Reuters

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Johannesburg - South Africa intends to create a R10bn fund to tackle massive unemployment, the ANC's secretary general Gwede Mantashe told Reuters on Tuesday.

The R10bn job fund will be a partnership between the government and the private sector, he said.

Initially the government will lay out the capital, and businesses who participate by hiring new workers or providing training schemes were likely to benefit from incentives such as tax breaks.

Job creation was expected to be the major theme of President Jacob Zuma's state of the nation address on Thursday, when he outlines his government's priorities.

"We must not only do something when the anger and humiliation of those unemployed turn into uprisings when they begin to revolt," Mantashe said.

The fund will be used to help Zuma's already announced plan to create five million jobs in 10 sectors, although some analysts say the focus on government-directed employment growth should be shifted to the private sector, with laws that make it easier and less costly for firms to hire workers.

Unemployment fell to 24% in the fourth quarter of 2010 from 25.3% in the third quarter, but more than half of employable youth under 24 were without work.

High unemployment levels are partially attributed to tough labour laws, which make it relatively expensive and unattractive for firms to hire new workers.

However, calls to amend the labour laws have traditionally raised tensions between Zuma's ANC and the labour federation Cosatu that supported his rise to power.

"He (Zuma) needs to make it easier and cheaper to do business and loosen labour market tension if there are going to be any strides towards growing employment," independent political analyst Nic Borain said.

Mantashe said the fund was intended to address skills shortages and to provide real benefits for the unemployed, and to lessen the impact of the poverty many of them endure.

The government has proposed sweeping changes to labour laws intended to appease Cosatu by increasing job security for temporary workers, but economists expect the shake-up will make unemployment worse and ramp up costs for employers.

The ANC and Cosatu are at odds over the ruling party dropping the adjective "decent" to describe the types of jobs it plans to create. Mantashe said there was nothing as "indecent" as being unemployed.

Apart from the job fund, Zuma's government was also contemplating a youth wage subsidy for entry level workers. This is likely to appease business, which was unhappy with paying high start-up wages without knowing an employee's level of skill.

cosatu  |  jacob zuma  |  gwede mantashe  |  job creation
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