17 Febuary 2010
The government is looking at new ways to boost economic growth and job creation as South Africa emerges from the global economic recession, says Finance Minister Pravin Gordhan.
“The recent crisis and its aftermath have led to a serious introspection and rethinking of what were thought to be robust and superior economic models,” Gordhan said during his maiden Budget Speech in Parliament, Cape Town on Wednesday.
He said all South Africans shared a commitment to expand job creation and grow the economy.
Most pressing was the need to reduce joblessness among young South Africans, to support labour-intensive industries through industrial policy interventions, to improve the performance of the state, and to ensure that the country maintained a competitive exchange rate and low inflation rate.
New industrial policy
Other interventions that the government would look at in supporting growth and employment were skills development, public employment and rural development programmes, as well as initiatives to improve the country’s savings level and ensure a more inclusive labour market.
Gordhan said the new industrial policy developed by the Department of Trade and Industry and recently approved by Cabinet would help make the economy a more inclusive one. The 2010/11 Budget sets aside an additional R3.6-billion for industrial policy initiatives.
The government was looking at ways to promote the country as an attractive gateway for businesses looking to extend their operations into Africa.
Youth wage subsidy under consideration
A youth wage subsidy, as announced by President Jacob Zuma in his State of the Nation address last week, was also being considered, the aim being to raise employment among school leavers by a further 500 000 by 2013.
“Our preliminary estimate is that about 800 000 people will qualify [for this subsidy,” Gordhan said.
Treasury Director-General Lesetja Kganyago said in a media briefing before the Budget Speech that the idea was for the South African Revenue Service to pay the wage subsidy to 18- to 24-year-olds during their first two years of employment.
Kganyago said the National Treasury would release a document in March which would clarify the scope of the proposed wage subsidy.
The unemployment rate among South Africa’s 18 to 24-year-olds currently stands at 48.2 percent. About three-million young people do not have work.
Other job creation measures
In its Budget Review, the government said that it was also looking at other ways of increasing youth employment, including reducing the probationary period for young workers, gearing learnership allowances to act as incentives for hiring youngsters, and installing a specific minimum wage for young people.
South Africa’s economy is forecast to grow by 2.3 percent in 2010, recovering to 3.6 percent by 2012.
According to the National Treasury, an economic growth rate of six percent a year would create one-million more jobs than growth of 3.5 percent a year, reducing the country’s unemployment rate to 13.8 percent compared with 19.8 percent at the lower growth rate.