Mariam Isa
4 June 2009
Johannesburg — President Jacob Zuma's state of the nation address yesterday reassured investors that SA's business-friendly policies would stay in place, but his pledges on job creation were seen as "ambitious" in the face of recession.
Zuma said the government aimed to create half-a-million "job opportunities" by the end of this year, and 4-million by 2014 through its expanded public works programme.
Analysts say that the shrinking economy could shed up to 300 000 permanent jobs this year while 400 000 jobs could be lost in the course of the economic downturn.
"It's really rather far-fetched to talk about creating half-a-million jobs this year," said Econometrix chief economist Azar Jammine.
"I don't even know if the government has the management capability of implementing so many job opportunities -- it's a tall order."
The official unemployment rate rose to 23,5% in the first quarter from 21,9% in the previous quarter, ending a decline over the previous five years, when the economy was growing briskly.
Economic output shrank 6,4% in the first quarter of this year - its fastest decline since 1984 - marking the start of SA's first recession in 17 years. Mining and manufacturing were hit hardest, with output falling at record rates.
Zuma said the fight against poverty would remain the "cornerstone" of official focus, with the creation of "decent work" at the centre of its economic policies, which are also aimed at attracting investment.
Much of the scepticism about Zuma's job pledges hinges on the definition of "decent" work. Many economists see a contradiction between that and temporary, unskilled jobs.
Standard Bank economist Danelee van Dyk said Zuma's job pledges were "amazing and ambitious. We have only managed to create 1,7-million jobs over the past eight years. So these targets must include inferior, casual jobs, which is rather contradictory if you are talking about decent work."
Development economist Miriam Altman, executive director of the Human Sciences Research Council, thought the goals achievable, based on a different, international concept of "decent work" -- the opportunity to achieve an acceptable standard of living through earnings and social protection.
Public works programmes employed 300 000 people a year now, but this would fall to 150 000 if reduced to the full-time equivalent, she said. "There's a commitment and understanding that these programmes need to be a lot bigger."
By 2014 there could well be 4-million job opportunities for short-term but decent employment she said. "There's a range of things planned and budgeted for, which will hopefully add up to something worthwhile."
Zuma said the government would reduce the regulatory burden on small companies, a decision welcomed by Business Unity SA, the country's largest business organisation.
He acknowledged that the global and domestic recession would affect the pace at which SA could address its challenges, and said money would be spent "prudently" with no wastage or rollover of funds.
This was seen as a signal that the government would stick to the fiscal and monetary policies that have earned SA respect in global financial markets.
"There's enough in there to satisfy everyone," said Razia Khan, Standard Chartered's regional research head for Africa.
"The real test comes in implementation and risks are always heightened in a downturn. But for now the address was as reassuring as it gets."
Zuma's address was "as good as it could be", said Jammine, but it did not tackle the macroeconomic issues on which the government was under fire from labour unions: fiscal policy, inflation targeting and labour regulations. "He's obviously skirting them."
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