Mr Speaker, Mr President, Deputy President and hon members, in the state of the nation address on Thursday evening the President reminded us that we were meeting against the backdrop of a severe global economic crisis.
This is a crisis that is not of our making. It had its origin in the bursting of the financial bubble in the developed world - a bubble caused by a proliferation of speculative activity, fuelled by a hands-off approach by regulatory authorities who were mesmerised by narrow, free-market, fundamentalist ideologies.
We, in South Africa, were largely spared the systemic financial sector implosion some other countries went through. This was largely thanks to a combination of prudent financial regulations; the National Credit Act, which limited reckless lending; and the maintenance of exchange controls, which limited potential exposure of pension funds or municipal accounts to the kind of unsafe investments in derivatives that a number of their counterparts elsewhere had made, with disastrous consequences.
We were not, however, able to escape the second-order, real economy, effects of what soon became a global economic crisis. The current crisis is sometimes referred to by commentators as the Great Recession. This term draws attention to the fact that the world has been through the biggest crash since the Great Depression of the 1930s and came perilously close at critical moments to lurching into a depression no less severe than that of the 1930s.
It has also been a crisis truly global in character. No country, not even China, escaped the negative impact at some time and to some degree.
It is against this background that we have to record and grapple with the consequences of the loss of around 900 000 jobs. Most of these jobs were in mining because across the world, the crisis produced an abrupt fall in demand and in prices for mineral products. It was also felt in manufacturing, which experienced a 30,4% fall in physical volume of production, and suffered 202 000 job losses between October 2008 and December 2009.
In manufacturing, the subsectors most affected were those most integrated into global value chains and which were producing consumer durables dependent on credit finance for their purchase. In South Africa, as elsewhere, this included the motor industry which, in South Africa drives at least six to seven other subsectors; as well as the already fragile clothing and textile sector, which nevertheless continues to provide employment to nearly 100 000 people.
We are fortunately now officially out of recession, as is the global economy as a whole. According to latest figures for December, manufacturing output was 3,2% higher than in the corresponding month of 2008 - the first annualised rise for 14 months. But there is still great uncertainty about the durability of the global recovery, with most analysts agreeing that the recovery is fragile and that there is still a risk of double-dip recession.
Mr President, you referred to the Framework Response agreed to in February last year between government, business, labour and community representatives. This response package was indeed unique, and, as such, received much favourable comment because it was a product of social dialogue with responsibilities assumed by all parties. It was that which, I believe, gave it its resilience and demonstrated the meaning of our slogan, "Working together, we can do more".
Among the main features of the Framework Response was our commitment to push ahead with the then R787 billion infrastructure investment programme as our main countercyclical response. Your announcement in the state of the nation address - that we will be spending R846 billion over the next 3 years on public infrastructure - shows that our efforts in this regard will not all peter out once the Fifa World Cup investments have been completed. It shows rather that we are on track to effect a major infrastructure renewal programme that will continue for many years to come.
Other dimensions of the Framework Response include the training lay-off programme and the R6,1 billion facility made available to distressed companies by the Industrial Development Corporation. The training lay-off programme basically involves supporting companies to place in training programmes workers who can't be employed in production due to the recession while they continue to draw at least part of their wages. Applications involving 2 219 workers were approved for the pilot project and applications involving a further 831 workers are close to approval.
In addition, facilitation provided by the Commission for Conciliation, Mediation and Arbitration, the CCMA, in terms of the framework and the Labour Relations Act, saved a further 4 482 jobs. The IDC's R6,1 billion facility envisages assisting companies in distress as the result of recession to the tune of R2,9 billion through 2010, with a further R3,2 billion available for 2011.
Between April 2009 and January 2010 around R1 billion of assistance was approved, resulting in 7 854 jobs being saved.
In addition, we have also developed sector-specific response packages involving fast-tracking certain facilities and support measures, including support packages for the motor industry, the clothing and textile industry, and capital equipment and metal fabrication sectors.
A feature of many of these programmes is that we have insisted on reciprocal commitments in return for any support government has made available. Generally, this has covered undertakings on refraining from, or moderating through negotiation, retrenchment of workers and refraining from, or moderating, extraordinary bonuses on dividend payments to managers or stakeholders. Through these and other crisis response measures, we have, I believe, been able to save many jobs, as well as strategic industrial capacity that would otherwise have been lost, most likely irretrievably.
Besides, some of the measures in place - notably the training lay-off programme - have strengthened the capacity of companies to position themselves ahead of the curve in taking advantage of improved circumstances.
It is notable, for example, that BMW, one of the major companies involved in using training lay-offs, was among the first motor manufacturers to have announced, since the recession, a significant investment in the manufacture in South Africa of new-generation vehicles; in this case, through an investment amounting to R2,9 billion. BMW did not retrench workers, but rather used the training lay-off facility to upgrade skills needed for its new project. [Applause.]
Mr Speaker, although our short-term response has cushioned us to some degree from the ravages of the recession, the recession has also highlighted the need for us to accelerate our efforts to bring about structural change that will place our economy on a more labour-absorbing growth path.
We need to make ourselves less vulnerable to the vagaries of cycles and bubbles originating elsewhere. We also need to accelerate structural changes to our growth path so that we can achieve our manifesto commitment of creating decent work for our people.
Even before the recession, when our economy grew at the highest level for the longest sustained period since any time post-World War II, unemployment never fell to below 23% of the economically active population in the strict definition. This points to the stark reality that the unemployment problem we face in South Africa is fundamentally structural rather than cyclical in nature.
In a nutshell, the accumulation path in South Africa under colonialism and the early years of apartheid depended on drawing large numbers of low-paid African people into unskilled work in mining and other primary sector activities. The notorious migrant and contract labour systems were the most visible manifestations of this.
From the mid-1970s onwards, however, as a result of a combination of the gold mining industry having passed its prime and increasing mechanisation in both mining and agriculture, we witnessed the expulsion and later marginalisation of former unskilled migrant workers from employment.
While our economy made important advances during the past 15 years of our democracy, we have not yet succeeded in bringing about structural change on a scale sufficient to absorb those marginalised, structurally unemployed people into new, productive, income-earning activities. That is the challenge that continues to confront us.
I want to suggest that there is sufficient evidence from economic history to support the proposition that there has been no case ever anywhere - and the examples can stretch from the principality of Venice in the 16th century to China today - of an economy which has moved onto a growth path characterised by increasing, as distinct from diminishing returns, without identifying appropriate productive activities and then mobilising support and human energy to bring those productive activities into operation.
On Thursday this week, I will be making a statement in the House about the 2010-11 and 2012-13 Industrial Policy Action Plan, Ipap, which we will release thereafter. Next week, we will engage the portfolio committee on the details of Ipap 2, after which the portfolio committee will hold public hearings.
Mr President, in the state of the nation address you indicated that Ipap would be a mechanism, one among several others, to ...
... build stronger and more labour-absorbing industries, as well as to provide a new focus on green jobs.
The new Ipap will include a combination of cross-cutting and sector- specific actions. It will include proposals and action plans linked to defined timeframes aimed at bringing about a significant overhaul of procurement legislation and practices. This is aimed, amongst other things, at ensuring that we achieve a greater impetus for local manufacturing and job creation from the infrastructure investment programmes that we will be undertaking.
There will also be proposals and action plans to align the Competitive Supplier Development Programme being undertaken by some state-owned enterprises to a revamped national industrial participation programme; and proposals to move a range of key purchases for infrastructure programmes to long-term fleet procurement processes and to boost the proudly South African campaign.
All of these, we believe, will create improved opportunities for local industries to supply a greater proportion of the inputs needed in ways that can boost decent employment.
In the years ahead, through these efforts, we believe we will be able to position ourselves as a significant manufacturer of capital equipment for infrastructure projects, not just for the domestic market, but also to service projects on the African continent and further afield.
We will also be putting forward new proposals, linked to time-bound action plans, to enhance access to concessional funding for industrial development, focusing on the off-budget role of developing finance institutions and particularly those involved in industrial and enterprise funding.
We will be signalling in a more strategic use of trade policy instruments and standards to support local economic development and decent work. These proposals will be operational generally across the board, but will also be customised to meet particular needs of specific sectors.
As you indicated, Mr President, our proposals will be focused on particular high, labour-absorbing, value-added sectors, but Ipap will also seek to promote more labour-absorbing and hence decent work-creating activities in all the sectors that we work with.
You also mentioned green jobs. Moving towards a greener economy is essential both to respond to our own domestic challenges of promoting greater energy efficiency and to the common global challenge of mitigating the threat of catastrophic climate change.
In our efforts to create green jobs, we will be responding to a global trend that recognises that there are opportunities for new economic activity and decent jobs from going greener. Through Ipap 2, we will be proposing a number of first steps on a journey aimed at positioning ourselves at the front end of the curve on green jobs.
Again, our approach will involve a combination of focusing on specific quick wins for immediate attention and promoting a broader proactive involvement in greener productive activity across the board. Further details on Ipap 2 as well as our specific job creation targets will be provided later in the week.
In addition to Ipap, further work from within the economic cluster will identify a broader range of actions we need to take to place us on a growth path capable of meeting the challenge of creating decent work for our people. Within the Department of Trade and Industry, an additional priority focus for us will be on enterprise development. In the course of this year, we will be stepping up our efforts to promote SMME development.
Recognising that young people are disproportionately represented among the unemployed, we have begun a conversation with the National Youth Development Agency with a view to aligning our efforts with those of this important agency. We will also be developing a new strategic thrust to promote co-operative development following a highly productive engagement we have been involved in with our National Economic Development and Labour Council, Nedlac, partners. We are planning to take these proposals through the Cabinet process in the middle of this year.
Mr President, you are a very hard taskmaster. The outcomes-based monitoring system which your administration is developing requires of us not just to deliver on activities of the sort that I have described, but, more importantly, on concrete outcomes as it means something and begins to change the lives of people.
While you have not yet finalised the outcome targets for the economic cluster, we know that you want us simultaneously to achieve ambitious outcomes in economic growth, increasing labour absorption and reducing inequality. The three have not always gone together in the past.
The challenge for us to do so now will be tough against the background of a still fragile global economy, but it is not an unattainable goal. Other countries, and most notably in recent times, Brazil, have made progress on all three fronts simultaneously. That is what our people need and we dare not fail them. Siyabonga. [Thank you.] [Applause.]