Pushing back the frontiers of poverty and unemployment through accelerated growth

1. Pushing back the frontiers of poverty and unemployment through accelerated growth Economic Strategy for 2003 Presentation to the Portfolio Committee on Trade and Industry 18 February 2003

2. Background to Microeconomic Reform Strategy Chronology • Jan 2001 – Government adopts an Integrated Economic Action Plan to address specific microeconomic constraints to growth • Jan 2002 – Plan is consolidated into Microeconomic Reform Strategy and implementation is accelerated • Jan 2003 – Sharpen implementation of the strategy focusing on employment creation and poverty eradication

3. Microeconomic Reform Framework Input Sectors: Transport Energy Telecomms Water Cross-cutting issues: HRD Technology and R&D Access to Capital Infrastructure Growth Sectors: Agriculture Tourism Cultural ICTs Mining & metals Clothing & textiles Chemicals & biotech Auto & transport Key Performance Areas Growth Employment Competitiveness BEE SMMEs Geographic Spread Vision 2014

4. SA’s economic performance 1 Eight years of consistent growth • 2.5% growth per annum 1993 – 2001 • 0.5% growth in GDP per capita 1993 – 2001 • Growth outlook is positive • Mixed sectoral contributions to growth in output

5. SA’s economic performance2 Restructured Economy • Easing of the balance of payments constraint • Increasing contribution of manufacturing and services to GDP • Increasing productivity and improved perceptions of SA’s global competitiveness • Significant increase in exports of manufactured goods and services

6. SA’s economic performance3 Growth has not been shared • Employment still a challenge • Industry restructuring has involved job-shedding • Increased casualisation of employment and associated lowering of incomes • Growth centered around traditional economic hubs (GP, WC, KZN)

7. Unemploymentformal sector employment has shrunk 1994 to 2001 • Notes: • Underemployed refers to domestic worker, informal sector & subsistence agriculture • Unemployment by broad definition would include ‘discouraged’ workers and increased from about 28.6% to 41.5% • While informal sector grew substantially over this period, it is now leveling off and evendeclining to a small degree. Source: Labour Force Survey

8. Labour market status among those aged 15 - 65 years Millions 20.0 16.2 16.1 , , 15.0 13.5 , 12.6 11.9 , 11.8 11.7 11.5 ' ' , , 10.4 ' 9.4 9.3 9.2 10.0 ' ' ' 5.0 4.1 4.1 & & 3.2 3.2 & & 2.5 2.2 & & 0.0 1996 1997 1998 1999 2000 2001 Labour market status , ' & Ec. active Employed Unemployed The employed and the unemployed = the economically active population ( those aged 15 - 65 years) The economically active and the not economically active = the working age population

9. InequalityUnemployment by Race Group - 1999 87% of the unemployed are African Source: Labour Force Survey

10. InequalityUnemployment by age-group

11. Geographic InequalityUnemployment Rate by Province – 1999 Source: Stats SA 2002

12. Geographic Inequality Growth in GDP per province Source: Stats SA

13. Unemployment Per capita GDP Growth in GDP 2002 2007 2014 2002 2007 2014 Time Some assumptions about economic growth 1 Poverty eradication and employment creation can only be achieved if we accelerate the economic growth rate

14. Some assumptions about economic growth 2 Growth must lead to employment creation through increased output and increased labour-absorption

15. Some assumptions about economic growth 3 There is a clear link between educational attainment, work experience, employment and income

16. Some assumptions about economic growth 4 There is a clear link between the provision of economic infrastructure and levels of economic activity • The provision of infrastructure: • improves the quality of life of people • promotes productivity levels in the economy • reduces pressure on the environment • is essential for the functioning of markets • Without adequate and well-maintained infrastructure: • people are not aware of economic opportunities • people cannot access and exploit economic opportunities • economic development is constrained

17. Some assumptions about economic growth 5 A strong and active state is required to place the economy on a job-creating and redistributive growth trajectory Institutional Challenges • Decisive government action and capacity to manage and implement • Inadequate reliable and credible statistics • Insufficient relevant management information for use by public managers in decision-making

18. Priorities for 2003/4 1. Address critical skills shortages 2. Build on export success 3. Expand the services sectors 4. Provide critical economic infrastructure 5. Expand economic opportunities 6. Strengthen regulation and management of parastatals 7. Joint planning and implementation by government departments 8. Boost investor confidence 9. Immediate job creation