State must play proactive role in saving jobs

Tuesday, February 10, 2009

Parliament - Government must play a proactive role in ensuring the retention of jobs in key sectors such as mining, says Minerals and Energy Minister Buyelwa Sonjica.

"It is crystal clear that the role of the state has to go beyond the regulatory function and extend to playing a strategic role in exercising leadership and facilitating a developmental trajectory for our economy," said the minister.

She was speaking in Parliament on Monday during the debate on President Kgalema Motlanthe's State of the Nation Address.

"At the whiff of the sudden implosion of the global financial crisis at the end of the third quarter of 2008, it became apparent that the ramifications thereto would be severe. Mining operations were in jeopardy as mining companies fell under financial distress with resultant retrenchments of mineworkers," Ms Sonjica said.

The current global financial crisis and the resultant economic meltdown poses a serious threat to the world economy including South Africa's as a drop in the demand for the country's commodities will directly effect Gross Domestic Product (GDP) growth and lead to mass retrenchments.

Sensitive to the plight of the private sector and businesses that remain the engine and drivers of the economy, government has already stepped up efforts to mitigate the effects on the country. However, the minister said government would not parachute in solutions to a global crisis and a societal problem.

During his State of the Nation Address on Friday, the President outlined government's plans to save jobs including continuing with public investment projects, intensifying public sector employment programmes, adapting industrial financing and incentive instruments to help deal with challenges in various sectors, and also encouraging development finance institutions to assist firms in distress because of the crisis.

President Motlanthe said other mitigating actions will be undertaken within the private sector to counteract an excessive investment slowdown and unnecessary closures of production lines or plants and alternatives to layoffs will be explored, including longer holidays, extended training, short time and job-sharing.

Government also plans to expand social expenditure including social grants.

"I am happy to report that in the interactions between the Presidency and leaders of various social partners, we agreed jointly to devise interventions that would minimise the impact of this crisis on our society.

"The task team dealing with these matters is still hard at work," he said.

Minister Sonjica said the President's plan must be supported by all, adding in advancing South Africa's industrial development agenda, the role of minerals beneficiation cannot be overlooked.

Energy poverty is a grim reality for many South Africans, and the provision of energy is a prerequisite for socio economic growth and development.

The reliable supply of affordable electricity and other energy carriers is critical for industrial development, employment and poverty alleviation in our country, Ms Sonjica said.

Renewable energy must be key to energy generation, but most importantly, the technology for renewable energy must be manufactured in South Africa as it would create the necessary industrial capacity.

"Key solutions being investigated by the National Energy Task Team include the implementation of demand side management initiatives to reduce overall demand by 10 percent.

"The Power Conservation Programme, Demand Side Management and co-generation form the pillars of the national demand management strategy," she said.

The next few years are crucial for South Africa's state power utility, Eskom, in the successful execution of its Build Programme, which will beef up its power generation capacity.

In the meantime, the minister said, South Africans must intensify their demand side management efforts, as demand reduction will be the only real differentiator in the short to medium term.

"It is important for all South Africans to make a real effort to reduce their electricity demand, while cogeneration guidelines are still in the pipeline," she said.