Govt announces R10bil job-saving initiative

Friday, February 20, 2009

Parliament - Government is to pledge R10 billion over the next three years as part of an initiative to save jobs during the international economic crisis.

The details of the initiative was released in a report from the Presidential Jointing Economic Working Group which met on Thursday in Cape Town.

The special National Jobs Initiative, led by the Presidency, will bring together a range of new and revamped separately administered programmes.

The report, titled a Framework For South Africa's Response to the International Economic Crisis, said attention would be given to those sectors which were already showing signs of early job losses. These include the clothing, textiles and footwear, mining and the auto and capital equipment sectors.

Government will also, with the help of labour and businesses in these sectors, develop proposals within the next four weeks to provide a rescue package to other affected industries including the electrical and electronics sectors, engineering and the building materials industry.

"Such [stimulus] packages will include reciprocal commitments by companies of what they will contribute to turnaround strategies," the report reads.

The National Jobs Initiative will be mandated to coordinate and accelerate financing of industrial and special employment measures as well as social measures to avoid job losses and to actively increase the number of employed persons.

The report makes mention that development finance institutions would need to play a significant role alongside government in order to save jobs and keep the South African economy buoyant.

The joint committee mandated development finance institutions to place rescue package proposals to government and the task team within four weeks.

The parties also agreed to develop action plans to ensure timely implementation of a number of planned initiatives including the creation of jobs and intensifying the Expanded Public Works Programme (EPWP), including others.

Following the meeting of the committee on Thursday, a number of task teams have been established to monitor progress on the proposal put forward and include the Leadership Team, Investment and Financing Task Team, Social Interventions Task Team, Employment Task Team, and Distressed Sectors Task Team.

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

The economic crisis, caused by a series of factors including gross imbalances and inequities in the global economic system, the impact of the financialisation of economies, ineffectual regulation in several of the major world economies and poor business practices, resulted in significant asset depreciation, rising unemployment and a sharp slowing in economic growth.

While the crux of the economic recession has hit the developed world more than emerging markets, investor sentiment towards developing economies such as South Africa is one of caution.

The international credit crisis has meant that funds have become scarce and expensive and that portfolio investors are wary of emerging markets, including South Africa, reads the report.

The joint committee's overarching goals, according to the report, are to minimize job losses and economic shock, ensure that all activities are aimed at strengthening the capacity of the economy, and that there is high levels of investment in public sector infrastructure.

"In line with the principles outlined above, we are convinced of the need for a bold intervention in the form of a broad stimulus package, as signalled in the recent budget that has economic and social components," the report highlighted.

Following the Working Group's meeting on Thursday, Eskom Chairperson Bobby Godsell said they would "pull every lever" to lessen the impact of the global economic crisis on the people of South Africa.

"What we are trying to do immediately is save jobs, homes and businesses and keep the economy as healthy as possible."

He described the current global economic crisis as the worst in at least a generation.

Minister of Trade and Industry, Mandisi Mpahlwa, said the initiative was a collective, workable response to cushion South Africa from the impact of the crisis.

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