Zuma outlines plan to weather recession

Thursday, August 6, 2009

Pretoria - President Jacob Zuma on Wednesday announced several bold steps to be taken by government in response to the current global economic crisis.

He outlined the measures following a meeting where he was briefed on the recommendations made by the economic response task team set up to look into ways South Africa could respond to the current global economic crisis. 

These include making R6 billion available to the Industrial Development Corporation in the next two years.

Mr Zuma said a significant portion of the current financial year's allocation has been committed to support firms facing financial difficulties from the crisis.

In December 2008, the social partners that comprise the Presidential Economic Joint Working Group, namely organised labour, business and government, were called upon by then President Kgalema Motlanthe to consider how South African should respond collectively to the more difficult economic conditions the country faces.

The group was tasked to draft a 'framework response to the economic crises' and guide the government on its implementation. 

The framework was approved by the working group in February, as the basis for a national response to the impact of the international economic crisis. 

The group recommended the setting up of a training layoff scheme as one of the alternatives to retrenchment for workers and companies affected by the recession. The scheme, to be launched in September, would entail a temporary suspension of work for a worker or group of workers that will be used for training purposes. 

For this purpose, President Zuma said R2.4 billion will be placed in the National Jobs Fund (NJF) drawn from the resources in the National Skills Fund and the Unemployment Insurance Fund. 

The NJF will be used to pay training allowance for workers, pegged at 50 percent of the basic wage to a maximum of R6 239 a month. It will only be applied to employees earning less that R180 000 per annum. The programme will run for three months for a group of employees. 

President Zuma said the framework has been "commended" internationally for bringing together social partners in forging a common response to the current economic crisis. 

The recommendations have received a nod from trade union federation COSATU. "We are responding to a crisis, this is not a normal situation," said COSATU Secretary General Zwelinzima Vavi. 

He warned though that the IDC will have systems in place to guard against abuse from some business. 

Sectoral Education and Training Authorities (SETA) have also been requested to set aside additional funds for the training course, which would cover skills that will be useful to the company concerned.

At the beginning of the global economic crisis, indications were that South Africa remained largely unaffected. The country had been sitting in a relatively strong position for long, but recently several companies have begun shedding jobs. South Africa is facing a recession after 17 years