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JOB CREATION AND INFRASTRUCTURE IN SOUTH AFRICA

JOB CREATION AND INFRASTRUCTURE IN SOUTH AFRICA. March 2011 CLGF Conference (Cardiff) SALGA Economic Development And Planning Mayur Maganlal. Contents. Introduction Unemployment Challenges Role of Capital Investment in Infrastructure Expanded Public Works Programme

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JOB CREATION AND INFRASTRUCTURE IN SOUTH AFRICA

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  1. JOB CREATION AND INFRASTRUCTURE IN SOUTH AFRICA March 2011 CLGF Conference (Cardiff) SALGA Economic Development And Planning MayurMaganlal

  2. Contents • Introduction • Unemployment Challenges • Role of Capital Investment in Infrastructure • Expanded Public Works Programme • The case of Ehlanzeni (Limpopo Province)

  3. Introduction • Traditional LED is focused on “creating the enabling business environment”, given the vast poverty and unemployment challenges but current administration is taking a more proactive / focused / interventionist stance • Job creation, public investment and rural development emerged as key points in finance minister PravinGordhan’s budget 2011 speech • The SA government pursues its New Growth Path (NGP) which includes a focus on infrastructure spend • Energy, transport (road construction and maintenance), communications, water, education and housing • Industrial Policy Action Plan (IPAP2) to support key sectors and more focused use of government procurement to create jobs • National Programmes such as EPWP affect all spheres of Government to invest in infrastructure projects and job creates: • Labour Intensive Construction methods • MIG Funds • For new projects and maintenance • Incentives based on performance • For LG, capital investment is often an easier than doing “LED”

  4. The jobs challenge Labour absorption (Percentage of people aged 15-64 who are employed) (ILO) South Africa 41,3% Egypt 43,2% India 55,6% Argentina 56,5% South Korea 58,1% Malaysia 60,5% Brazil 63,9% China 71,0% Unemployment challenge 4 Confidential

  5. Countercyclical Fiscal & Monetary Policy GLOBAL ECONOMIC CRISIS : THE NATIONAL RESPONSE ‘Stimulus Package’ (NEDLAC/Presidency) Investment in Infrastructure Macroeconomic Policy Industrial & Trade Policy Employment Measures Social Measures Global Coordination • Transport (road, rail, public transport, port operations); • Water, dams & sanitation; • Housing; • ICT; • Electricity; • Health & education; • Counter-cyclical (expansionary) fiscal policy • Reducing real interest rates; • Competitive exchange rate; • Tax relief to low-income households and companies in distress; • ‘Rescue package for vulnerable sectors (clothing, textile, autos, mining, capital equipment, retail, housing construction, private services); • Support for SMMEs in crisis; • ‘Green’ industries; • Local procurement; • Trade: tightening import controls. • National Jobs Initiative (R10 bn); • Support where > 50 retrenchments; • Expand Public Service (education, health, social work, CJS); • EPWP II: 2 million full-time equivalent jobs; • Training & skills development, incl. training the retrenched; • Industry-level social plans; • Improved UIF benefits; • Emergency Food Relief; • Support community food production.; • Access to FBS; • Social Grants (CSG to age 18, pension for men from age 60); • Promotion of Cooperatives; • Improve global Economic coordimation; • Prudent regulation of SA capital markets; • G20 as platform to enhance stability in fin mkts; • Use IFIs to finance counter-cyclical policies in developing countries. R 787 bn 2010 - 12 NO Reference to either the local or provincial spheres

  6. GLOBAL ECONOMIC CRISIS : THE NATIONAL RESPONSE Overarching Priority: To implement counter-cyclical policies that are customised for the locality, through a dedicated ‘local stimulus package’, to mitigate the negative impacts, and to position the local economy for recovery Investment in Infrastructure Industrial Policy Employment Measures Social Measures • Support to communities and households in distress through partnering with NGOs & the private sector (CSI) • EPWP, • Municipal “shovel ready” Infrastructure Projects; • 2010 projects • Advice to corporates and SMMEs & support to access rescue packages & concessionary credit, Local procurement • Employment programmes to absorb retrenched workers, leveraging on National Jobs Initiative; • Retraining • Surveillance of local economy • Partnership: civil society & private sector • Ongoing Communication

  7. New Growth Path Drivers • SoNA: • R9 billion in the Jobs Fund over the next 3 years – public employment schemes plus subsidies to private employers • R10 bn from the IDC in next 5 years for job-creating projects • R20 billion in investment subsidies • Comprehensive support for SMEs • Address cost drivers and inflationary pressures across the economy • Active industrial policy based on increasing competitiveness and targeting sectors that can create employment directly and indirectly • Comprehensive rural development • Stronger competition policy • Stepping up education and skills development • Enterprise development • Reform of Broad-Based BEE • Reform labour policies to support productivity and improve protection for vulnerable workers • Technology policies geared to improving innovation in ways that support employment creation and small- and micro-enterprise • Developmental trade policies with a strong orientation to new growth centres • Investment to support African development 7

  8. State Owned Entities - ESKOM • Major plants located near coal reserves, with localised employment effects • Should create 2000 new jobs in the coming year • Main employment impact from maintaining electricity supply across the country • Also create jobs in all provinces through • Procurement from build programme • Electrification programme • Municipal electricity maintenance

  9. Expanded public works programme (epwp) Nation-wide programme which will draw significant numbers of the unemployed into productive work, so that workers gain skills while they work, and increase their capacity to earn an income

  10. Epwp objective To utilise public sector budgets to alleviate unemployment

  11. What is an epwp project • Deliberate attempt by the public sector body to use expenditure on goods and services to create work opportunities coupled with training for the unemployed • Projects usually employing workers on a temporary basis (either by government, by contractors, or by other non-governmental organisations), under code of good practice for SPWP or learnership employment conditions

  12. Areas of opportunities for epwp • Increasing the labour intensity of government-funded infrastructure projects • Creating work opportunities in public environmental programmes (eg Working for Water) • Creating work opportunities in public social programmes (eg community health workers) • Utilising general government expenditure on goods and services to provide the work experience component of small enterprise learnership / incubation programmes

  13. Background to EPWP Phase 1 • The first phase of the Expanded Public Works Programme achieved its 1 million work opportunities targets a year ahead of schedule • The second phase of the EPWP to scale up further to contribute significantly to halving unemployment by 2014 • EPWP was projected to grow to three times it current size within the next 5 years • EPWP 2 implementation to start on 1 April 2009

  14. Key Enhancements EPWP 2 • EPWP Employment Creation Targets • EPWP Wage Incentive • Sector Programmes • Introduction of the Non-State Sector (community) • Increasing Technical Capacity and Support • Funding

  15. Key elements of phase 2 • Overall Phase 2 targets will be distributed across all spheres of government over a five year period based on projects/programmes • The EPWP incentive is based on paying all public bodies that create work above a minimum threshold for the EPWP target group an incentive of R50 per day for every day of work created

  16. Phase 2 targets in Full Time Equivalents broken down per sphere of government

  17. Infrastructure sector Infrastructure SectorProject based employment in capital works Potential for long term employment programmes in maintenance works

  18. Objectives for infrastructure sector • Both the programme and budgets of the EPWP have multiple objectives: • Eradicate backlogs and create employment • Provide social services and create employment • Taken existing programmes, and institutional setups and required additional job creation: • Municipal official who previously build roads, now has to still build roads, but must also create jobs • Lot of energy focused on changing how existing programmes are implemented, not establishing new institutions with the purpose of doing things more labour-intensively

  19. Epwp report for ehlanzeni district municipality

  20. Ehlanzeni district: status report Summary of EPWP performance - Number of projects = 25 - Expenditure = R78,953,542 - Planned jobs = 800 - Actual Jobs = 976 • Youth = 388 • Women = 581 • Disabled = 7 - Training • Accredited = 2105 person/days • Non-accredited = 1405 person/days

  21. Ehlanzeni district: status report (08-09)

  22. Ehlanzeni district: status report (08-09)

  23. Ehlanzeni district: challenges • Have not reached our full potential in implementing the EPWP program • No unit dedicated to EPWP activities • Planning • Infrastructure sector active, however economic, social & environmental/culture sectors not reporting on activities

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