Transcript The Growth Path: Provincial Implications

The New Growth Path:
Provincial Implications
Input to NCOP Select Committee
February 15, 2011
Overview
•
•
•
•
The New Growth Path: A brief overview
The spatial challenge
Implications for provinces
Implications for municipalities
SONA 11 February 2011
• “We have declared 2011 a year of job creation through meaningful
economic transformation and inclusive growth.
• “We have introduced a New Growth Path that will guide our work in
achieving these goals, working within the premise that the creation
of decent work is at the centre of our economic policies.” …
• “All government departments will align their programmes with the job
creation imperative. The provincial and local spheres have been
requested to do the same.
• “The programmes of the State Owned Enterprises and development
finance institutions should also be more strongly aligned to the job
creation agenda.”
Millions
The jobs challenge
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Working age population
growth (1980-2009) =
28
gap =
unemployed
+ not
participating
24
20
16
Labour absorption (Percentage
of people aged 15-64 who are
employed) (ILO)
South Africa
41,3%
Egypt
43,2%
India
55,6%
Argentina
56,5%
South Korea
58,1%
Malaysia
60,5%
Brazil
63,9%
China
71,0%
Labour Force growth
(1980-2009) = 1.9%
12
8
1980
1985
1990
1995
2000
2005
Confidential
4
New global context
• The rise of new economic
powers
80
– China, India, Brazil
– Scramble for Africa’s
resources
70
actual
estimated
60
– Imbalances and systemic
weakness remain
– Slow recovery in global North
– Policy space
• Climate change – and new
massive green industrialisation
wave
• Technological innovation –
jobs for the future
% of global GDP
• Economic fragility
China
50
India
South Africa
40
Brazil
Japan
30
United States
Western Europe
20
10
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
0
Confidential
world GDP
and national
shares
calculated
using PPP
dollars (IMF
WEO)
5
China – an example
What we buy:
Top 10 Imports
What we sell:
Top 10 Exports
1.Iron ore
2.Ferro-Alloys
3.Chromium ores
4.Manganese ores
5.Platinum
6.Flat-rolled steel
7.Wool (raw)
8.Copper waste and scrap
9.Zirconium and vanadium ores
10.Nickel plates, sheets and foil
1.
2.
3.
4.
5.
6.
Cell-phones and phones
Computers
Printing machines
Plastic and rubber boots
Televisions and monitors
Kettles, microwave ovens and
toasters
7. Dresses and women’s jackets
8. Suitcases and bags
9. Sports shoes
10. Computer and cash register parts
and accessories
Confidential
6
Rail lines in Africa
The New Growth Path
• Addresses
– Deep-seated structural
problems that lead to
high joblessness and
inequality
– Specifically have to
turn around major job
losses in recent crisis
– Take advantage of
opportunities in
regional economy and
changing global
conditions
• The process
– Builds on mandate to prioritise
employment creation
– Approved by Cabinet in
October 2010
– Cabinet lekgotla identified
priorities for 2011/12, reflected
in SoNA
• Requires alignment by all
spheres and agencies of the
state, with regular reporting on
what they are doing to support
employment creation and
growth
Employment intensity
and growth
Rate of growth of GDP required to create 500 000
employment opportunities a year
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
0
0.5
Employment intensity of growth (rate of growth
in employment relative to rate of growth of GDP)
1
• To achieve jobs target requires growth
AND greater employment intensity of
growth (employment increase relative
to GDP growth)
• Employment intensity of 0,2% would
require a growth rate of over 15%;
employment intensity of 0,8 would
require a growth rate of 4%
• Debates about historic intensity of
growth: 0.8 from 1996 (Census data) to
the second quarter of 2010 (QLFS data);
0.5 from 2001 (LFS data) to the second
quarter of 2010 (QLFS data); and .67
from 2002 (LFS data) to the second
quarter of 2009 (QLFS data).
The approach:
Identify key jobs
drivers where
employment is
possible
Identify what is
needed to achieve
the jobs and
investment
5 million new jobs by
2020
Key steps by the
state: directly and
in facilitating
broader growth
Private sector: how
to align outcomes
with jobs goals
New opportunities
in changing
regional & global
environment
10
Jobs drivers
Infrastructure
Energy, transport,
communications,
water,
housing.
Main economic
sectors:
Agriculture &
agroprocessing
Mining and beneficiation
Manufacturing (IPAP2)
Tourism/other services
Look for employment opportunities in
“jobs drivers” and implement policies
to take advantage of them
New economies:
Green economy
Knowledge
economy
Social capital:
The social economy
The public sector
Spatial
opportunities:
Rural
development
African regional
development
11
• Macro-economic
strategy: countercyclical/support a
competitive rand
– More relaxed
monetary policy
– Address
inflationary
pressures through
fiscal policy and
targeted microeconomic
strategies
Microeconomic policy drivers
Policy drivers
1. Address cost drivers and inflationary pressures
across the economy
2. Active industrial policy based on increasing
competitiveness and targeting sectors that can
create employment directly and indirectly
3. Comprehensive rural development
4. Stronger competition policy
5. Stepping up education and skills development
6. Enterprise development
7. Reform of Broad-Based BEE
8. Reform labour policies to support productivity and
improve protection for vulnerable workers
9. Technology policies geared to improving
innovation in ways that support employment
creation and small- and micro-enterprise
10. Developmental trade policies with a strong
orientation to new growth centres
11. Investment to support African development
Increase FET
college intake to
1 million
students
Sufficient
resources for
training
Key skills targets
Engineers: 30 000
Artisans: 50 000 by
2014/15
Training at
centre of new
growth path
Easier recruitment
of foreign skills
coupled with skills
transfer plans
SOEs to target artisans.
Confidential
Broad-based
workplace training:
10% of workforce or
1,2m workers on
training
Computer skills at all
schools, training for all
public servants
Review of
SETA
performance.
13
Measures to
address inflation
focussing on
volatile prices
Address main
cost drivers to
enhance
competitiveness
Support higher
savings including
through retirementfund reform and
reduce the cost of
industrial finance
Confidential
Looser monetary policy
stance to support a more
competitive (and stable)
exchange rate and reduce
cost of investment
Policy driver:
Development
policy
package
Pact with organised labour
and business on wages and
prices, protect the social wage
and support job creation
Additional measures
to depreciate and
then stabilise the
rand, as required
More restrained fiscal
policy reflected in
around 2% real growth
in expenditure
Eliminate
waste and
ensure rigorous
reprioritisation
of budgets
14
Resource drivers
Resource drivers:
• state budgets (national,
provincial and local)
• the resources of SOEs
and DFIs
• Universities and science
council resources
• retirement funds
• the domestic private
sector
• international investment
• donor funding
• community-owned
financial institutions such
as stokvels and co-ops.
• SoNA:
– R9 billion in the Jobs Fund
over the next 3 years –
public employment
schemes plus subsidies to
private employers
– R10 bn from the IDC in
next 5 years for jobcreating projects
– R20 billion in investment
subsidies
– Comprehensive support for
SMEs
15
Institutional drivers
The developmental state
• Agile, responsive,
learning
• Profound shift in
culture – from
compliance/process
to delivery/outcomes
• Alignment around
growth path – review
budgets, programmes
and procurement
policies
1. The DFIs (IDC, DBSA, Land
Bank, Khula, SAMAF, NEF)
2. The GEPF and the PIC, as crucial
investment drivers
3. The SARB, within its
Constitutional mandate
4. The infrastructure SOEs
(Transnet and Eskom)
5. ITAC and Customs & Excise
6. The Competition
Commission/Tribunal and other
regulatory, standard-setting and
accreditation bodies
7. The science councils, universities
and Mintek
16
Institutional drivers
outside the state
BUSINESS
• Business and markets vital –
jobs, investment,
entrepreneurship, technology
• Large companies linked to
national-base
• Developmental state not
simply hostage to market
forces and vested interests:
through careful alliances, clear
purpose and leveraging its
resource and regulatory
capacity, can align market
outcomes more clearly with
development needs
LABOUR
• Resources include skills commitments,
productivity-agreements, retirement
funds, union investment vehicles, wage
agreements, public service delivery
• Without a common vision and strategic
unity, not possible to make real
progress and the society will simply
exhaust itself on policy polarisation,
while the extent of the developmental
crisis grows
SOCIAL DIALOGUE
• Time-consuming – but crucial
• Deepen dialogue at sector and workplace
• Strengthen institutions from
constituencies to NEDLAC
• Mobilise South Africans behind a vision
17
In other words…
…a comprehensive response to the
structural crises of poverty,
unemployment and inequality…
…based on solidarity across society
A dual challenge
around geography
• Apartheid space
was designed to
enforce
marginalisation
and
disempowerment
– The Bantustans
as labour
reserves
– Townships far
from jobs, adding
to the cost and
difficulty of
employment
– New administrations at
municipal and provincial level
– Limited coherence on economic
policy with national sphere
– Institutions and systems in
some areas weak and underfunded
– Particularly in former
Bantustans where revenues are
low and it’s hard to attract skills
19
Settlement patterns
Bantustans
Provinces
20
Inequalities in economic
activity and opportunities
Provincial GDP, 2009
Manufacturing
Finance, real estate and business activities
Other
900,000
800,000
Millions of rand
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
• Gauteng, KZN and the
Western Cape account
for
Gauteng
KwaZulu-Natal
Western Cape
Eastern Cape
Mpumalanga
Limpopo
North West
Free State
Northern Cape
– Just over half the
population
– Two thirds of the GDP
– Two thirds of all formal
employment and all private
employment although only
half of public employment
– Three quarters of
manufacturing and of
financial/business services
The employment challenge
Employment ratio, 2010
50%
40%
30%
20%
10%
0%
Western Cape
Gauteng
Free State
Mpumalanga
Northern Cape
KwaZulu-Natal
North West
Eastern Cape
Limpopo
• The labour absorption rate –
the share of the population
with employment – is around
64% internationally, but only
41% in South Africa
• Much lower in former
Bantustan regions than in the
metros and secondary cities
• Reflected in provincial
disparities, with the lowest
labour absorption rates in
Limpopo and the Eastern
Cape
60%
Municipal differences
average
• Differences in
economic
opportunity translate
into huge differences
in incomes
• Incomes in the
former Bantustans
are around a tenth
as high as in the
metros and
secondary cities
• Income inequalities
mean that average
incomes are much
higher than medians
in all cases
median (roughly)
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Major urban centre
Rural and small town
former RSA
Mostly former Bantustan
The result: Huge differences in
municipal revenue and capacity
Municipal revenue by source, 2009
Funding of capex by source, 2009
100.0
30
90.0
25
80.0
60.0
50.0
40.0
Subsidies
30.0
Own income
Billions of rand
Billions of rand
70.0
20
Other
Donations
Own income
Loans
Grants
15
10
20.0
5
10.0
Mostly in former Rural and smaller Major urban
Bantustans (R400 towns in former centres (R4300 pc;
pc; 70% subsidies) RSA (R2100 pc; 20% 20% subsidy)
subsidy)
0
Major urban areas Rural and small Mostly in former
(R1290 pc) town former RSA Bantustans (R230
(R710 pc)
pc)
The New Growth Path
response
• The economic strategy:
– Develop a realistic spatial
perspective – what can we
do to improve conditions in
every region?
– Ensure support from SOEs
and DFIs
– Drive rural development to
create livelihoods in
impoverished regions
– Make economic centres
(metros and secondary
cities) more efficient
• Governance:
– Support improved
communication and
alignment between spheres
on economic strategies
– Tailor implementation of NGP
to realities of different regions
– Clear and practical annual
priorities
– Improve understanding of the
employment impact of
projects, programmes and
regulations, with regular
reports
25
In the coming year...
• Improve alignment between settlement patterns
and economic activity in the long run
• Better planning to secure outcomes (eg power
station with human settlements, water, industry)
• Improve connections between economic policy
departments in provinces, municipalities and
national government, based in
– Strengthening the Economic Development MinMEC
– Clear prioritisation amongst economic programmes
and projects
•26 Address regulatory inefficiencies in economic
centres (metros and secondary cities)
Provinces – initial areas
of joint action
• Align provincial and national economic plans
• Integrated green economy plan developed by
IDC for all provinces
• Provincial impact of infrastructure
• Small business agencies: coordinated, one-stop
shop
• Agro-processing: connect the opportunities in a
systematic way
• Procurement: review of regulations that will
provide provinces with new opportunities
• Jobs goals to be developed by each province. 27
The contribution of SOEs
and DFIs
IDC disbursements, 2006 to 2010
Transnet - employment from mega
projects, including suppliers
Rail
Ports
Value (millions of rand)
Estimated employment impact
Pipelines
Province's contribution to national GDP (2009)
40,000
35%
12,000
35,000
30%
10,000
8,000
6,000
4,000
2,000
30,000
25%
25,000
20%
20,000
15%
15,000
10%
10,000
5%
5,000
0%
Gauteng
KwaZulu-Natal
Northern Cape
Eastern Cape
Limpopo
Western Cape
North West
Mpumalanga
Free State
KZN
W Cape
N Cape
Free State
Gauteng
E Cape
Mpumalanga
Limpopo
North West
-
Share of GDP
Value in Rmns and number of jobs
14,000
Eskom
• Major plants located near coal reserves, with
localised employment effects
– Should create 2000 new jobs in the coming year
• Main employment impact from maintaining
electricity supply across the country
• Also create jobs in all provinces through
– Procurement from build programme
– Electrification programme
– Municipal electricity maintenance
Working with the DFIs
and SOEs
• NGP should drive a spatial vision that
increasingly shapes projects from DFIs
and SOEs
• EDD is working with the IDC, Khula and
SAMAF to align with requirements of
employment creation and equity in spatial
terms
• Improve communication flows between
spheres to maximise impact
MinMEC to
align
development
strategies
Alignment
of SOE/DFI
projects
Moving
forward
together
Employment
reporting to
monitor
outcomes
Common
vision for
spatial
development
Conclusion
• 2011 is a year of job creation
• Coordination of policy, regulation, planning and implementation
across government is critical
• Involve communities
• The public sector contributes directly and by creating conditions for
new private activities that can generate new opportunities on a mass
scale
• Social partners - business, labour and civil society - have a crucial
role to play
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