Hon Chair, I think the fundamental issue in order to enter into this debate effectively is an understanding of the structural features of this economy. That would be particularly helpful. Let us examine what happened in this economy from 1970 to 1995. Although employment grew by almost 17,6% over the 25-year period, the African population showed zero growth in terms of employment. Why is that so?
Two industries were particularly affected. Almost 2,2 million African people were employed in agriculture in 1970. In 1995, this number had dropped to 930 000. In the mining industry, it went down from 610 000 to 353 000 - a significant shift. But you saw employment growth in manufacturing and other sectors where skills were important.
What does that tell us in terms of approach and strategy? What that tells us, Xhamela, is that these sectors are labour absorbing. Skills are also a critical factor. We cannot take skills out of the equation as we grow this economy. That is the first point I want to make as we move forward. I will come back to this issue when we refer to the New Growth Path.
That is the structure of this economy which we have inherited. From 2001 to 2008, however, we saw some growth, including in the employment of Africans, for a variety of reasons. This was accompanied by rising incomes, which is important. We showed growth in employment from 2001 to 2008 and saw a reverse trend in 2008 because of the global economic crisis.
I am not going to bore you with the details of that crisis. All of us are familiar with its impact. Three things stand out, however. The first one is that the neo-liberal theory has died. [Interjections.] Clearly, the neo- liberal theory has died.
The second is that everybody agrees that there is a critical role for the state to play. There is no doubt about that. That has serious implications, not only for the role of the state, but also for economic theory in general, and the understanding of it.
The third issue is the shift in global balances. If you look at the International Monetary Fund World Economic Outlook for the next few years, you will see that major growth is going to be in the emerging economies, particularly in Brazil, Russia, India, China and South Africa, the Brics countries. Our Brics partners basically support our strategic outlook and our participation in the bloc. After this meeting, the Minister is going to attend a Brics meeting.
So, what has been our response? Our response to this economic situation is precisely informed by these structural issues, and therefore the New Growth Path must be seen as an integrated response.
I know there are quite a couple of myths which I need to dispel about the growth path. The first one is that people tend to view the growth path in isolation from a range of other interventions by the state. For example, people ask about industrial policy. The Industrial Policy Action Plan, Ipap, is part and parcel of what we are talking about.
The hon Marais says the sectors are not spelled out, whereas the sectors are spelled out in Ipap. And what are the key features of those sectors? It is that they must be labour absorbing. That is one critical outcome we want to achieve - labour intensity. So, we should not see the New Growth Path in isolation from those other government interventions.
The second myth about the New Growth Path is the assumption that the five million jobs will all be created by the state. Fundamental to the growth path is that government itself, through its various programmes, will, indeed, create jobs. In addition to that, however, it will facilitate the creation of jobs. I will come back to that point in a moment.
We have got to dispel those myths. We must be proud that, as we speak, this economy is beginning to turn around, albeit in a modest way. In the last quarter of 2010, we created 157 000 jobs; 127 000 of those were in the community and social services. This is a critical sector, with a labour absorption intensity of 67%.
What is disturbing, though, is that we have seen some savings from the private sector growing from 14,7% to about 17%. This may mean that investment is slowing down a bit. We need to interact with the private sector on that and include it in our discussions with them. In a sense, we have to see government's effort as part of a broader intervention, not only for government alone but for the private sector. So, we should not use that myth.
We proceed from the basis that South Africa is a resource-based economy. The question is how to ensure that we can use our national resources effectively. A key feature of that may be infrastructure and logistics. We are privileged to have infrastructure; it also ensures that we can unlock the economy.
With regard to transport - and I am sure the Minister of Transport is probably going to talk about this - we need to unlock this economy. Let me give you some statistics which I have seen. Assuming a 4,4% growth in the economy, we are likely to have a problem with logistics. We have to invest about R900 billion over the next 15 years on roads, rail and ports. So, it is not only that you will be creating jobs as you build that infrastructure, but on the back of it, you are opening up the economy for growth.
A key aspect, as we put in this infrastructure, is where it is located. The Minister has alluded to the green economy. However, there are practical issues. For instance, Transnet will be rolling out about 304 locomotives and 7 000 wagons. As part of that, we have got to ensure that the Industrial Development Corporation, IDC, works with Transnet in the placement of those wagons.
We are talking about an integrated response, which is intended to have a major impact, not only on government, but on the private sector. If we need to get the coal out of the Waterberg, we have got to put down a railway line leading out of the Waterberg. There is the existing infrastructure we have got, too, but by putting down more infrastructure we are unlocking the mining industry. That is an integrated response that we are beginning to talk about.
I conclude, then, by repeating my opening shot: What we need is a better understanding of the structural features of this economy. Only then will we be able to design the appropriate instruments and policies. I thank you. [Applause.]