Direct public investment – Ramaphosa’s new plan to stimulate the economy

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President Cyril Ramaphosa.
President Cyril Ramaphosa.
GCIS

Public employment. This is the government’s new “buzz phrase”, hailed by President Cyril Ramaphosa as an instrument that can create jobs at scale in the short term while markets recover, and also create social value in the process.

The launch of the Presidential Employment Stimulus last week marked what Ramaphosa described as, in his newsletter to the nation on Monday, “a fundamental shift in our approach to tackling unemployment”.

This “far-reaching and ambitious public investment in human capital” will pitch the state as both a creator and an enabler of jobs, he said.

“The Presidential Employment Stimulus, which involved a public investment of R100 billion over the next three years.

Ramaphosa added that the stimulus was the result of extensive consultation with national departments, provinces and metros to rapidly design employment programmes that could be rolled out or expanded within six months

This direct public investment would support employment and create economic opportunities that generate social value, and would do more than just tackle the unemployment crisis, Ramaphosa said.

Read: Economic recovery depends on investment

“The example is often cited of the massive public works programme undertaken by the United States after the Great Depression in the 1930s. This was not just a stimulus, but also promoted social participation and inclusion,” he said.

He gave several examples of innovative public employment programmes in the developing world, including in India, Ethiopia and here in South Africa.

“These programmes make a direct investment in local economies, reaching poorer areas first, supporting local small enterprises and trickling up into the wider economy from there,” Ramaphosa explained.

“They also promote social participation and inclusion, providing communities with the means to change their lives as they undertake new forms of work. In doing so, they contribute to transformation both at a local level and within broader society.”

Like public employment programmes across the world, this employment stimulus supports and complements the critical role of the private sector in creating jobs. It is counter-cyclical, in that as the recovery advances, the scale of public employment will decline
President Cyril Ramaposa

“Direct public investment is responsive uses the state’s resources to respond to local community needs, be it for greener spaces, food security, more early childhood development centres, or for better and more accessible roads.”

“It offers social protection and income security to those who face destitution because they are unable to find work.

It supports the broader economic recovery agenda by urgently getting people to work on improving our national and municipal infrastructure.

Read: The key to economic recovery? Public employment schemes – Ramaphosa

“Through the interventions in the stimulus, we are creating work for those who need it, while leaving a lasting impact on entire communities,” said Ramaphosa.

“Like public employment programmes across the world, this employment stimulus supports and complements the critical role of the private sector in creating jobs. It is counter-cyclical, in that as the recovery advances, the scale of public employment will decline.”

Ramaphosa believes that the work experience and skills acquired by beneficiaries of the Presidential Employment Stimulus will improve their prospects of securing formal employment.

This direct public investment would support employment and create economic opportunities that generate social value, and would do more than just tackle the unemployment crisis
Cyril Ramaphosa

“The experience gained is also a pathway to entrepreneurial activity. Participants will improve their skills and capabilities to start their own businesses, and can use the steady income provided by public employment to branch out into other income-generating activities,” he said.

“I have consistently affirmed that the Covid-19 crisis is also a window of opportunity to build back better. At this time of great upheaval, we would be doing ourselves no favours by making unrealistic promises that raise expectations, only to come short when they are not met. This is why each of the jobs and livelihood support interventions is fully funded, with a clear implementation plan.”

Ramaphosa added that the stimulus was the result of extensive consultation with national departments, provinces and metros to rapidly design employment programmes that could be rolled out or expanded within six months.

The implementing departments and other stakeholders were rigorously assessed on their capacity to implement.

Other stimulus highlights

According to Ramaphosa:
  • In every one of the programmes that fall under the stimulus, opportunities will be widely advertised and recruitment will be fair, open and transparent;
  • The goals are realistic, measurable and achievable, and draw lessons from past experience and international best practice;
  • The stimulus will supplement the efforts of the public sector, allowing for greater scale and social impact as well as new forms of partnership with diverse social actors;
  • The stimulus includes a new national programme to employ teaching and school assistants in schools. Schools are making these appointments right now, delivering new opportunities in every community across the length and breadth of the country;
  • Public employment is not just for unskilled work. There is a cross-cutting focus on graduates, with opportunities for nurses, science graduates, artisans and others;
  • The stimulus will also protect jobs in vulnerable sectors that have been hit hard by the pandemic. Support will be provided to Early Childhood Development practitioners, mainly self-employed women.
  • More than 74,000 small farmers will also receive production input grants;
  • The stimulus provides new funding to help the sector back onto its feet, including support to digital content-creation and expansion of e-commerce platforms;
  • A critical enabler for wider job creation, made more important by the pandemic, is connectivity. To overcome the digital divide, the stimulus will provide affordable, high-speed broadband to low-income households through innovative connection subsidies and the expansion of free public Wi-Fi.


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