Govt launches plan to boost jobs

2010-03-06 10:00

Cape Town - The government has launched an economic development strategy that aims to harness funds from state institutions, the private sector and retirement funds to finance development programmes and help create jobs.

Under the three-year plan, a new economic development department created by President Jacob Zuma last year will oversee economic policy, a role previously played by the finance ministry.

The ANC's labour union and communist allies have been critical of the government's pro-business economic policy under former Finance Minister Trevor Manuel, saying it had not benefitted millions of South Africans trapped in poverty 16 years after the advent of black majority rule.

The new plan acknowledges that growth in Africa's powerhouse has not been "sufficient to fully address economic and social challenges" including unemployment of about 25%, with a recession last year slashing about 900 000 jobs.

"At the heart of the strategic plan are a set of actions ... to increase the number of decent work opportunities in the economy. This requires a pro-employment growth path that absorbs larger numbers of people into the economy," Economic Development Minister Ebrahim Patel said in an introductory note to the strategy.

Patel told a parliamentary committee on Friday that the plan would, among other measures, look at encouraging more private sector investment and also tapping into retirement funds to finance development projects.

The plan envisages using up to five percent of private retirement savings as well as part of the R700bn government pension fund's assets. Analysts said this would likely take the form of "development bonds" issued to institutions.

This should ease pressure on the government which has poured spending into a multi-billion rand infrastructure refurbishment programme.

"The social responsibility of investing in bonds specifically aimed at ... the reduction of poverty and inequality via job creation and sustainable economic growth is likely attractive enough ... to make absorption of these bonds likely," said Investec economist Annabel Bishop.

"The question is how will the funds be spent? If the money ... is not well spent and efficiently spent, this will tarnish the moral attraction of the issuance," she added.