We inherited a racially biased structural unemployment situation with its origins predating the advent of democracy in South Africa.
We tend to forget that.
From 1970 to 1995, overall employment of all the so-called South African races grew by 17.6%. During that same period, the employment of African workers grew by 0%. Of the total of 5.277 million Africans in employment by 1970 only 5.275 million were in employment by 1995. This was caused by a decline in employment in both agriculture and mining. In agriculture there were 2.26 million employed by 1970, which decreased to 930 000 by 1995. By 1970 610 000 Africans were employed in mining while this declined to 353 000 by 1995.
Skills-based employment growth encouraged by technological change also affected the trends.
It was only after the advent of democracy, during the rule of the ANC government, particularly between 2001 and 2008, that the country experienced a period of rapid growth in employment of 23%, accompanied by rising incomes.
This was the first pro-poor employment growth in 40 years, with rising numbers in African employment.
The period between 2004 and 2007 witnessed economic growth that was only second to that of the 1960s.
No one can therefore justifiably question the ANC’s track record in economic management despite all the ongoing challenges.
And then in 2008 the recession came and more than a million jobs were lost.
In a world of uncertainties, how do we begin to manage our economy to attain the best possible result for our people and our country?
Should we follow the orthodox principles of the Right or the Left?
This led to us developing the New Growth Path (NGP) in our attempt to deal with the new policy and political space created by the uncertainties of our times.
This policy is predicated on both the state and private sector playing a role in addressing the twin problems of unemployment and poverty in our country. Government will continue to decisively deal with the impediments facing job creation.
This, however, does not diminish the role of government as a direct employer, in particular, for the fulfilment of social, health and other services required by the communities.
Of the 157 000 jobs created in the last quarter of last year, 127 000 were in the community and social services sectors.
The public sector went out of its way and invested in job creation, thus mitigating the job losses arising out of the recession.
In the meantime, gross savings by the corporate sector as a percentage of gross domestic product rose from 14.7% in 2009 to 17.5% last year.
The result is that fewer jobs were created in the private sector as a result of low investment.
It is limiting to view the NGP in isolation from other government initiatives. Through various programmes such as the industrial policy action plan and various infrastructure programmes, jobs will be created.
Take a look at our infrastructure programme:
» Addressing the ageing water and sanitation infrastructure in the country requires R10 billion over the next five years;
» There is a need to replace commuter rail rolling stock at a budget of about R89 billion;
» There is a need to redress South Africa’s modal imbalance of freight as an attempt to increase rail capacity and rail utilisation capacity. Transnet has budgeted R35 billion for this;
» Arresting degradation of non-toll road network (140 000km of the total 750 000km needs to be maintained) will require R75 billion in the next few years; and
» Electricity supplier Eskom plans to spend R550 billion in capital expenditure until 2017 and has to create an additional 50GW of energy by 2025.
One of the key principles underpinning our infrastructure programme is that infrastructure strategies must generate sufficient demand for local goods and services to restart the economy.
In this context, developing the capacity of local industry to supply the inputs to our initiatives is critical. The benefits of local sourcing are enormous.
Local suppliers not only contribute towards the tax base, they also contribute towards strengthening South Africa as a key player in the economic geography of the world.
We are slowly turning our weaknesses into our strengths using the backlogs as stepping stones towards economic recovery that is inclusive and creates jobs.
» Godongwana is deputy minister of economic development. This article is based on an address he delivered in Parliament this week