24 November 2010
South Africa’s new economic growth path, which sets an ambitious target of creating five-million jobs and reducing unemployment from 25% to 15% by 2020, will call for “smart government” and better coordination with the private sector and organised labour, says Economic Development Minister Ebrahim Patel.
Announcing the framework for the new economic growth path during an address to Parliament’s economic development portfolio committee in Cape Town on Tuesday, Patel acknowledged that plan faced many challenges.
“We have too many agencies and too little co-ordination between them.”
The centrepiece of the new growth path, Patel said, was “a massive investment in infrastructure and people through skills development, together with smart government and better coordination with the private sector and organised labour.”
The plan will look to the “green” economy, agriculture, mining, manufacturing and tourism industries for most of the employment opportunities.
The plan calls for commitments from the government’s social partners, such as ensuring moderate wage increases while capping pay and bonuses for executives earning over R500 000 a year.
It also seeks the creation of a comprehensive social security system that fosters an improved savings culture in the country.
Steps to be taken
The strategy has a series of micro- and macro-economic measures aimed at helping the country reach its growth targets, including:
- Ramping up competition policy to create a more equitable marketplace.
- Creating and implementing an effective rural development policy.
- Stepping up education and skills development, including a review of the training system.
- Producing 30 000 more engineers by 2014 and 50 000 more artisans by 2015.
- Promoting small businesses and entrepreneurship by creating a single agency to consolidate funding from Khula, SAMAF and the Industrial Development Corporation.
- Revamping black economic empowerment, including incentivising job creation.
- Developing more focused trade policies in order to identify better export opportunities.
The new growth path leans on recommendations made in a 2008 growth report by the Commission on Growth and Development, which suggested that policymakers target five areas for long-term economic growth, namely:
- Remaining open to the world economy and new ideas.
- Maintaining macroeconomic stability.
- Sustaining high rates of saving and investment (about 20% to 25% of national income versus the current 16%).
- Allowing the markets to allocate resources.
- Maintaining committed, credible, and capable government.
The report looked at countries which were able to maintain GDP growth of more than seven percent for two decades or longer in recent times, namely Botswana, Brazil, China, Hong Kong, China, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan, China and Thailand.