Cape Town — South Africa will combat the effects of the global financial crisis by maintaining high public spending, creating new jobs in the social sector and helping private enterprise to counteract a slowdown in new investment, President Kgalema Motlanthe told Parliament in Cape Town.
Delivering the "state of the nation" address at the annual opening of Parliament, Motlanthe said South Africa was less severely affected by the crisis than many countries: "Indeed, in a period in which others are experiencing or projecting recessions, South Africa and the rest of the continent are still poised for growth, even if at a slower rate...
"But," he added, "we are all too aware that, because we are strongly integrated into the world economy, demand for our exports has declined; access to finance and inflows of capital have turned for the worse; lower demand has precipitated a scaling down of production; the creation of jobs is negatively affected and in some sectors retrenchment has become a reality."
These developments had forced the government to lower its forecasts for growth and job creation. He said the government will take action in four areas to minimise the impact of global developments:
- It will continue the massive public investment projects in which it plans to spend R690 billion (U.S. $70 billion) on infrastructure and other projects;
- It will boost public sector job creation in areas such as health, social work, education and law-enforcement;
- It will help mitigate "an excessive investment slowdown and unnecessary closures of production lines or plants" in the private sector, and explore giving workers longer holidays and extended training, or placing them on "short-time" and encouraging job-sharing as alternatives to retrenchment.
- It will expand social spending, for example by extending a child support grant to cover children up to 18 years old, and by expanding old-age pensions through making them available to men at a younger age.