President Cyril Ramaphosa's economic recovery and reconstruction plan is overly focused on short-term public employment creation, with not enough to stimulate job creation by the private sector, economists and business leaders have cautioned.
And while the long-awaited plan's commitments to fast-track growth-boosting economic reforms have been welcomed, critics say it provides few clues on how the government plans to deliver on its commitment to curb soaring public debt levels - or to turn around its poor record on implementation.
The plan reiterated several reform promises and initiatives previously announced, such as a huge infrastructure investment drive and a promise to auction digital spectrum by March 2021, and set ambitious new targets to achieve energy security within two years.
But it also extended the Covid special social grants by three months, affirmed a "buy local" plan to re-industrialise SA that had already been agreed at Nedlac, and provided some detail on the first year of a R100bn three-year public employment package.
Ramaphosa had promised the employment package as part of the R500bn Covid relief package he announced in April, and finance minister Tito Mboweni had allocated R19.6bn to it in his June emergency budget.
But it was only with this week's announcement that government officials for the first time provided details that will see R13.8bn spent in the current fiscal year to create 800,000 short-term job opportunities as the labour market recovers from a crisis that saw 2.2-million jobs lost in the second quarter, figures from Stats SA showed recently. New data this week shows the formal, non-farm sector shed more than 600,000 jobs in the second quarter.
Each of the new public employment opportunities "is fully funded and ready for implementation", Ramaphosa told parliament on Thursday.
SA’s action on
reform has long
fallen shorter … than
its talk [but ]
investors will be
somewhat buoyed
The job opportunities, many of which it is understood will last no more than four or five months, include an expansion of existing public works programmes and new programmes that Ramaphosa said would respond to local community priorities. Among these are plans to deploy 300,000 matriculants as school assistants as well as 60,000 jobs maintaining and constructing municipal infrastructure and rural roads.
Also on the list are plans to support hundreds of thousands of work opportunities in early childhood development, small-scale farming and the culture and sports sectors as well as create temporary posts for community health workers and nursing assistants.
Business Leadership SA (BLSA) said Ramaphosa's mass employment package would be important to provide rapid temporary relief to those unemployed.
However, BLSA also said: "It is not in itself a long-term solution that will create sustainable employment . It is only through economic growth and policies to stimulate employment in the private sector that quality, sustainable jobs can be created."
BLSA also warned it would be hugely challenging to roll out the mass employment plans at local level.
Said Absa economist Peter Worthington: "There was virtually nothing said on what the government would do to help the private sector create jobs, nor any clarity on how an expanded public employment programme would dovetail with the need to sharply cut overall public spending."
Ramaphosa's plan comes just two weeks before Mboweni presents his medium-term budget on October 28, which was postponed this week from October 21. The president warned that SA could not sustain its current debt level and promised a budget framework which "balances the need to restore fiscal sustainability with economic growth" but offered few clues on exactly how the government would find this balance.
Nor did he respond to recommendations from his own Presidential Economic Advisory Council (PEAC), which last week warned that fiscal consolidation to stabilise the public debt level was imperative but that the "active" scenario to achieve this, which Mboweni set out in June, would be too
drastic in its effect on the economy.
"It is patently not possible to stabilise the debt over the medium term despite the minister of finance's commitments in this regard - it will take much longer," the PEAC said in a report that was presented to the president at a meeting after the cabinet lekgotla on October 9. The cabinet lekgotla followed an ANC lekgotla which came after extensive negotiations at Nedlac yielded a plan that business, labour, the government and the community agreed to.
Ramaphosa emphasised the government's commitment to implementation and announced the creation of new bodies to this end, including a National Economic Recovery Council comprising cabinet members, to provide oversight and "enable rapid decision-making", as well as a Presidential Working Committee and an Economic Recovery Leadership Team.
But Worthington said: "South Africa's action on reform has long fallen shorter and slower than its talk. Investors will be somewhat buoyed by [Ramaphosa's] speech but for the most part will likely want to see real implementation."
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