Business Day *Allies cool on Cabinet’s new plan to boost jobs* *Linda Ensor, Business Day, Johannesburg, 27 October 2010*The government released its long-awaited economic growth strategy yesterday, but its leftist allies immediately gave notice they will not readily accept a “shared sacrifice” to ramp up growth and create jobs.
The “new growth path” was unveiled at a briefing after a special Cabinet meeting on Monday.
Among its aims are:
* Creating 5-million jobs in the private sector over 10 years;
* Forging a pact between business and labour;
* Promoting the growth of six key economic sectors;
* A major review of BEE; and,
* Active monetary policy interventions to achieve growth
through a more competitive exchange rate.
However, the ruling African National Congress’s (ANC’s) allies in the
Congress of South African Trade Unions (Cosatu) took a strong stand
against two of its key pillars — a reduction in the budget deficit and a
pact with business on wages, prices and savings.
It emerged yesterday that Finance Minister Pravin Gordhan will announce a reduction in the budget deficit in his medium-term budget policy statement in Parliament today. This is contrary to labour’s demand for an expansionist fiscal stance that would not entail cuts in state programmes.
Mr Gordhan will also make a statement on the exchange rate, Economic Development Minister Ebrahim Patel said when highlighting aspects of the plan.
The strategy calls for “a shared sacrifice” and a pact between business and labour to shift the economy on to a new growth path.
The government expected business and labour to focus on raising productivity, expanding the economy and job creation and not only the distribution of wealth between them, Mr Patel said.
But Cosatu is strongly opposed to any pact, believing the main problem is high executive pay and income inequality, and not wage rates which are low.
The South African Communist Party (SACP) also said it opposed a social compact “aimed at extracting further concessions from the working class and the poor as opposed to the rich”. Closing the apartheid wage gap; slashing executive pay in the public and private sectors; and containing “rampant price increases” on basic necessities were not negotiable for the SACP, it said.
Cosatu general secretary Zwelinzima Vavi said the federation was willing to discuss productivity and enhancing economic competitiveness — provided this also involved sharing of wealth.
Mr Patel said he was confident that when the concrete details of the plans were put on the table, labour would respond positively.
The minister in the Presidency for monitoring and evaluation, Collins Chabane, said the strategy made job creation the overriding priority of the government. It aimed to reduce the unemployment rate from 25% to 15%.
“The new growth path is a broad framework that sets out a vision and identifies key areas where jobs can be created,” Mr Chabane said.
For example, it projected 300000 new jobs by 2020 through greening the economy.
Macroeconomic and micro- economic interventions would be integrated. The macroeconomic approach entails balancing monetary policy interventions to achieve growth and jobs targets, through a competitive exchange rate and a lower cost of capital, with a restrained fiscal stance and reprioritising of public spending.
The microeconomic approach involves targeted measures to support jobs and competitiveness.
Focus would be on production, the three-year R800bn infrastructure roll-out, skills development and the promotion of key sectors identified in the industrial policy action plan.
The full document will only be released once the social partners have been briefed on it.
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