Labour-intensive economy to create jobs - Patel

Tuesday, March 23, 2010

Cape Town - The Department of Economic Development has identified several areas of the economy with potential to create new jobs as government embarks on a shift to a more labour-absorptive economy.

These will include emphasis on manufacturing, infrastructure development, green economy and rural development and agro-processing sector.

""The central ideas in the developmental growth path are to enhance the labour absorbing capacity of the economy... and to find ways to connect knowledge and innovation to the challenge of jobs and growth," said Economic Development Minister Ebrahim Patel delivering his department's budget vote on Tuesday.

He said the new growth path, aimed at stepping up the fight against poverty and unemployment, will recognize the crucial role of the private sector in creating new jobs.

While, South Africa's economy has started to show signs of recovery, Patel conceded that regulatory reforms that encourage employment are needed. The recession took a heavy toll on South Africa with some 870 000 people losing their jobs in 2009 and households suffering from falling incomes and high levels of debt. The domestic economy contracted by an estimated 1.8 percent in 2009 as a result of a decline in consumption spending and weak investment growth.

"What started as a financial crisis rapidly spread to the real economy and impacted on jobs, said Patel. Real GDP fell by 1.8 percent in 2009 but is expected to start growing to 2.3 percent this year rising to 3.6 percent in 2011.

Patel said recovering jobs lost in 2009 will require a major improvement in the employment performance of the economy with a focus on decent work opportunities and "better social outcomes". "We call this the development of a new growth path".

Government will also be looking at ways to improve the performance and impact of public institutions that are vital to economic development. Patel said an important policy focus for his department will be the creation of sustainable livelihoods and addressing the challenge of enterprises in the second economy.

Discussions had been held with companies, industry associations and organized labour on matters such as the exchange rate, industrial policy and trade policy. Patel further announced the formation of a Ministerial Advisory Panel which he said will serve as an ideas forum. "I am pleased to announce that we have made good progress in establishing the panel since my announcement of the idea some two weeks ago here in parliament," Patel said.