Recovery plan has no hope without help from private sector, Ramaphosa says

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President Cyril Ramaphosa said government needed the private sector to absorb some of the youth involved in state employment programmes.
President Cyril Ramaphosa said government needed the private sector to absorb some of the youth involved in state employment programmes.
  • President Cyril Ramaphosa said government needed the private sector to absorb some of the youth involved in state employment programmes.
  • Ramaphosa said the Employment Tax Incentive, which seeks to provide jobs for young people, has been expanded for four months.
  • He said the payment of PAYE and excise taxes have been deferred to help businesses to recover from the pandemic.

President Cyril Ramaphosa has called on the private sector to support the state's employment programmes, saying its interventions aimed at helping the economy recover from the Covid-19 pandemic will not be enough on their own to get the job done. 

Ramaphosa was replying orally to questions from members of Parliament during a hybrid plenary of the National Assembly on Friday. 

Among other things, the president was asked about government's response to the ongoing pandemic and the Economic Reconstruction and Recovery Plan (ERRP). 

The plenary comes a week after Statistics South Africa announced that unemployment had breached a new record at 34.4%, the highest it has been since the inception of the agency's Quarterly Labour Force Survey in 2008. 

Ramaphosa said the unemployment statistics were a reminder of South Africa's jobs crisis and the extent of the country's poverty.

Not the 'final solution'

In a blunt assessment of government's capacity to address the crises, Ramaphosa said the ERRP was not the final solution.

"While the interventions contained in our Reconstruction and Recovery Plan are necessary and significant, I will say now that they are not enough.

"The time has now come for us to assess how far we have come, to reflect on the choices that confront us as a nation, and to take bold actions to achieve economic progress," said Ramaphosa.

The president noted measures in the ERRP such as the expanded Employment Tax Incentive, which aims to drive the hiring of young people by reducing the cost of their employment. Pay-as-you-earn (PAYE) and excise taxes have also been deferred to aid economic recovery. 

He said nearly 12 million people have applied for social relief of distress grants, and the South African Social Security Agency (Sassa) has started paying these.

But, he said, these had to be supplemented by private sector initiatives.

"These measures are funded primarily through additional revenue received as a result of the strong performance of our mining sector and other exports. The interventions that we have implemented have sustained millions of jobs, prevented the closure of a number of businesses, and provided relief to the most vulnerable in our society," Ramaphosa said.

"We need to crowd the private sector in. They have participated through the employment tax initiative, and we need to scale this up," said Ramaphosa.

'Billionaire bubble'

In a supplementary question, DA leader John Steenhuisen said Ramaphosa lived in a "billionaire bubble". He charged that unemployment has gone up every year since Ramaphosa became president, asking the president if he felt the need to apologise to the South African youth.

Ramaphosa called Steenhuisen's characterisation of the situation opportunistic.

"What I was speaking to earlier, in case honourable Steenhuisen was not listening, is the challenge of unemployment. The pandemic alone resulted in the loss of two million jobs. We have carried a historical burden of unemployment, poverty and inequality.

"It is this that we are determined to address. For this government to have embarked on a job opportunity initiative to young people in ten months is phenomenal. It needs to be recognised for the impact that it has had. Of course, we need to expand it, but we are on the right path," he said.

EFF MP Ciliesta Motsepe asked Ramaphosa how he expected South Africans to believe government was investing in an economic recovery when it was "abandoning" job-creating state-owned entities like Denel and South African Airways (SAA).

"The honourable member said we have allowed entities like SAA and Denel to go without funding. That is not true. We have underwritten SAA for a long time. We have sought to save SAA from collapse and spent considerable amounts of money, even now," Ramaphosa said.

"Quite often, those who speak about these matters are completely oblivious to what the state balance sheet is all about. On one side there are liabilities and on the other side there are assets. Balancing these is complex," he added.

African Transformation Movement MP Vuyolwethu Zungula asked Ramaphosa about how effective National Treasury's loan guarantee scheme was at covering black-owned businesses, which might be debt-averse and may lack collateral needed for a loan.

The loan guarantee scheme was established to assist businesses affected by the pandemic as part of last year's Economic Stimulus Package. However, the uptake of the scheme has been a concern given possible hesitance to take on debt during the pandemic.

Ramaphosa said while there was no indication of how many black businesses were assisted by the loan guarantee scheme, he was aware that access to collateral was relatively limited among black South Africans, due to structural inequality in the South African economy.

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