Gordhan to soon decide on agency to steer R9bn jobs fund

2011-02-26 11:30

Finance Minister Pravin Gordhan said on Friday that the ­government would take a ­decision over the next few weeks on which government agency or department was best placed to administer the R9 billion jobs fund that would be rolled out this year.

He would not say how the ­government would realise its promise of delivering 5.5 million jobs by 2020, given that the economic growth estimate for 2013 was 4.4%, below the job-creating 7% contained in the New Growth Path.

“Let’s not ask whether we will make it, but let’s try,” he said.

Gordhan gave more details about the structure of the fund. He said investors wishing to tap into the fund would have to contribute funds towards financing the projects that were going to be supported by the fund.

“If we give you R50 million from the jobs fund, you must ­also be prepared to put R10 million on the table so we can go forward,” said Gordhan.

Although the details are yet to be thrashed out about which government agency will handle the fund, the state-owned Development Bank of Southern Africa (DBSA) is expected to play a key role in setting it up.

“We will get some help from the DBSA because it has experience in handling large sums of money,” said Gordhan.

The latest Budget Review released by the National Treasury this week has projected that initiatives supported by the R9 billion jobs fund could employ between 50 000 and 100 000 people over the next three years.

Gordhan pointed out that projects that created more jobs would receive funding ahead of projects that generated less ­employment.

The Budget Review shows that the proposed R5 billion youth employment subsidy will result in the creation of 178 000 new jobs for young workers.

“The youth employment subsidy is intended to increase demand for young workers. The subsidy will lower the relative cost of labour for businesses without affecting a worker’s wages,” the review reads.

Gordhan said the youth employment subsidy would not be implemented in a way that put older workers at risk of losing their jobs to younger workers.

Cosatu is opposed to the youth subsidy on the grounds that employers will use it to replace existing workers with younger workers.

“We understand the concerns about existing workers being displaced. We must design this subsidy in a way that this ­displacement does not occur,” said Gordhan.

He said about R150 billion of the R979 billion budget he tabled in Parliament on Wednesday had been set aside for job creation. About R73 billion of the R150 billion had been allocated to the Extended Public Works Programme, which is expected to create 800 000 short-term jobs over the next three years. The programme has created about 1 million jobs since April 2009.

Trade and Industry Minister Rob Davies said the Budget had gone a long way towards funding future job-creation drivers, particularly education and training.

Davies said South Africa needed to increase the pool of affordable investment capital available to development funding institutions such as the Industrial Development Corporation and the DBSA in order to drive growth and job creation.

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