Economic Crisis Response Task Team briefs the President

Thursday, August 6, 2009

President Jacob Zuma was briefed at the Union Buildings today by the leadership group of the 'Framework Response to the Economic Crisis' on progress in its implementation. The leadership group consists of representatives of Labour, Business, Government and the Community constituency who are responsible for guiding the implementation of the Framework.

The Framework was approved by the joint economic presidential working group on 19 February 2009 as the basis for a national response to the impact of the international economic crisis on South Africa.

The Framework has been commended internationally for bringing together social partners in forging a common response, and has been held up as an example of how countries can respond in a sustainable manner to the current financial crisis.

President Zuma noted that recent statistical reports showed that the global crisis was biting deep in South Africa, and that measures to soften the impact of the crisis on workers and the poor were very important. Growing job losses and rising indebtedness required clear and purposeful action to respond to the needs of our people.

Acknowledging the significance of the Framework, President Zuma emphasised that the central challenge was to ensure the timely implementation of the measures agreed to by the social partners. 

From the framework, several concrete programmes to implement the framework decisions have been developed through engagements with the social partners. These include:

* The setting up of a training layoff scheme as one alternative to retrenchment for workers and companies affected by the recession. The training layoff scheme would entail a temporary suspension of work of a worker or a group of workers that will be used for training purposes. It will be launched in September 2009 and will be applicable to workers in defined circumstances earning up to R180 000 per annum. 

An amount of R2.4 billion will be placed in a National Jobs Fund, drawn from resources in National Skills Fund (NSF) and the Unemployment Insurance Fund (UIF). This fund will be used to pay a training allowance to workers, pegged at 50% of the basic wage or salary, to a maximum of R6 239 a month. Sectoral Education and Training Authorities (SETA) have been requested to set aside additional funds for the training course, which would cover skills that can be useful to the company concerned as well as generic skills, including basic education and training and ICT skills.

The Commission for Conciliation, Mediation and Arbitration (CCMA) will assist trade unions and employers in structuring appropriate agreements for the variation of existing employment contracts to enable the training layoffs of workers.

Agreement has been reached in respect of the principles underpinning the scheme as well as most of the detail regarding its implementation. Ongoing work in respect of outstanding modalities will be finalised by the end of August 2009. 

* Agreement has been reached on a number of steps necessary to strengthen the ability and capacity of the South African Revenue Service (SARS) to address customs fraud that has led to many job losses. In addition, SARS has reported significant progress in respect of investigations, the confiscation of goods and prosecution of persons responsible for fraudulent import transactions involving, among others, smuggling, 'round-tripping' and under-declaration of value. 

* Key areas in respect of distressed sectors have been addressed, including support for distressed companies in the automotive sector, a rescue package for the clothing and textiles industry, increased incentives for the manufacture of capital equipment, transport equipment and fabricated metal products linked to South Africa's infrastructure development programme, and payments by government to small, medium and micro enterprises (SMMEs) and other businesses within 30 days. 

* The Industrial Development Corporation (IDC) has made R6 billion available over the next two years to respond directly to the crisis. A significant portion of the current year's allocation has been committed to support firms facing financial difficulties adjusting to the current crisis. 

* The Competition Commission's investigations into and prosecution of firms at various points in the food supply chain alleged to have engaged in various forms of prohibited anti-competitive conduct are far advanced. These include investigations or action in respect of bread, milling, dairy, poultry, fats and oils, fertilizers and supermarkets. 

* The National Debt Mediation Association (NDMA), a business initiative to assist indebted consumers, has been established to provide rules, standards and processes to address debt restructuring. 

Within government, a new integrated approach to the implementation of the framework has emerged. The Ministry of Labour has led efforts to finalise the training layoff modalities. The Minister of Finance has coordinated the customs and excise programme. The Ministry of Trade and Industry has led the work on distressed sectors. The Minister of Economic Development, working with the Presidency, has chaired the leadership team of social partners.

A number of other ministers are involved in additional areas of work that will be reported on shortly.

The business team in the discussion was led by Bobby Godsell and Jerry Vilakazi. Labour was led by Bheki Ntshalintshali, Dennis George and Manene Samela. The community sector was led by Lulama Nare.

While significant technical work has been done and important progress made, President Zuma called for implementation to be speeded up so that the effect of this work would begin to be felt by the population. 

"The important thing to remember is that work is being undertaken by all social partners in consultation. Not only are these partners part of developing our response to this crisis. They are also each responsible for implementing it," President Zuma said.

For further enquiries contact Alan Hirsch at 082 773 6922. 

For more information please contact Zingaphi Jakuja on 082 766 3940
Any other queries contact the Spokesperson, Mr. Vincent Magwenya on 072 715 0024

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Zingaphi Jakuja
Director: Media Liaison
The Presidency
Room 18 West Wing
Union Buildings
Mobile: 082 7663940
Office: 012 3005438
Fax: 0866835438
Email: zingaphi@po.gov.za
Alternative: zingaphij@mobileemail.vodafonesa.co.za
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