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New growth path to create jobs: Patel

24 March 2010

The South African government has identified several sectors with the potential to create new jobs as the country embarks on a shift to a more labour-absorptive economy, says Economic Development Minister Ebrahim Patel.

Delivering his department's budget vote in Parliament in Cape Town on Tuesday, Patel said the new growth path would include a focus on manufacturing, infrastructure development, rural development and agro-processing, and the "green" economy.

"The central ideas in the developmental growth path are to enhance the labour absorbing capacity of the economy ... and to find ways to connect knowledge and innovation to the challenge of jobs and growth," Patel said.

He added that the new growth path, aimed at stepping up the fight against poverty and unemployment in South Africa, would recognise the crucial role of the private sector in creating new jobs.

Reforms to encourage employment

While South Africa's economy had started to show signs of recovery, Patel conceded that regulatory reforms that encouraged employment were needed.

The recession took a heavy toll on South Africa's economy, with some 870 000 people losing their jobs in 2009 and households suffering from falling incomes and high levels of debt. The domestic economy contracted by an estimated 1.8% in 2009 as a result of a decline in consumption spending and weak investment growth.

"What started as a financial crisis rapidly spread to the real economy and impacted on jobs," Patel said. "Real GDP fell by 1.8% in 2009 but is expected to start growing to 2.3% this year, rising to 3.6% in 2011."

Patel said recovering the jobs lost in 2009 would require a major improvement in the employment performance of the economy, with a focus on decent work opportunities and "better social outcomes".

"We call this the development of a new growth path," he said.

Advisory panel

Patel said an important policy focus for his department would be the creation of sustainable livelihoods and addressing the challenge of enterprises in the informal or "second economy", adding that the government would also be looking at ways to improve the performance and impact of public institutions that were vital to economic development.

Discussions had been held with companies, industry associations and organised labour on matters such as the exchange rate, industrial policy and trade policy.

Patel further announced the formation of a special ministerial advisory panel, which he said will serve as an ideas forum. "I am pleased to announce that we have made good progress in establishing the panel since my announcement of the idea some two weeks ago here in Parliament."

Source: BuaNews