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JOBS: Private sector the key to job creation


There was little detail, beyond tax incentives and investment, on ensuring how job-creation targets would be met

Though the stage was set for finance minister Tito Mboweni to delve deeper into the government’s plans to create 275,000 jobs yearly during his maiden budget speech, he provided not a single detail.


President Cyril Ramaphosa promised during his state of the nation address this month that his administration would tackle unemployment by stimulating inclusive economic growth to enable the creation of jobs.

The 275,000 jobs figure was agreed on by social partners, including business and labour, at the jobs summit in October 2018.

Close to 10-million South Africans are unemployed, according to the expanded definition of unemployment that includes people who have stopped looking for work.

Trade union federations staged protests across SA in the lead-up to the budget, pleading with the government to announce radical interventions that would see more people active in the labour market.

However, Mboweni played it safe, mentioning only the job-creation schemes that are already in the pipeline.

He said the government had increased the income eligibility threshold for the employment tax incentive scheme, which supports about 1.1-million young people.

The incentive — which was introduced in January 2014 — works as a deduction from PAYE of part of the salary of a worker aged under 30 and earning less than R6,000 a month.

The employment tax incentive scheme has been extended for another 10 years.

Mboweni spoke about achieving accelerated inclusive economic growth and creating jobs, which is at the top of the president’s five priorities. The private sector "is the key engine for job creation", the finance minister said.

He said the government, through policy interventions, intended to end the uncertainty that has undermined confidence and constrained private sector investment.

"The R300bn worth of pledges made at the investment conference last year demonstrates that there is pent-up private sector demand if we grab hold of the opportunity."

To this end, he told MPs that the move to relax visa requirements would make it easier for tourists to visit and invest in the country.

Stakeholders in tourism have complained of the role played by policy decisions in the sector’s failure to take off, jeopardising its capacity to create millions of jobs.

Cosatu’s parliamentary officer, Matthew Parks, says Mboweni "barely touched" on how the government will ensure that job and investment targets are met.

"The president is leading from the front in confronting these challenges. But he is being let down time and again by his ministers, premiers, mayors and managers," he says.

Parks criticises national departments for failing to table their job-creation targets in the budget.

"Less than six departments have tabled job-creation targets in the 2019 budget. Most of these are in fact expanded public works programmes."

But Cosatu welcomes the finance minister’s announcement that R19.8bn has been allocated for industrial business incentives, with R600m apportioned to the clothing and textile competitiveness programme.

"This will support 35,500 existing jobs and create about 25,000 new jobs over the next three years," said Mboweni.

Another programme that would get a boost is the Jobs Fund, which has distributed R4.6bn in grant funding to create 200,000 jobs since it was established in 2011.

The government has set aside R9bn for the fund. The fund is meant to co-finance projects by public, private and nongovernmental organisations which contribute to job creation, using public funds to spark innovation and investment.

Mboweni said the fund would rise to R1.1bn over the next three years.

ANC treasurer-general Paul Mashatile told journalists after the budget speech that more jobs would inevitably be created through the added investment in infrastructure.

Mboweni allocated R30bn to building new schools and the maintenance of infrastructure, while the infrastructure fund would accelerate R526bn worth of projects in partnership with the private sector and development finance institutions.

The government has committed to spending an additional R100bn on the fund over the next 10 years.

Another burning issue ahead of the budget — and flagged by Ramaphosa — was the need for government investment in skills development ahead of the fourth industrial revolution.

Mboweni did not specifically mention the fourth industrial revolution, though he did speak about the rise of technology, adding that the government would roll out a maths and science grant.


LINK : https://www.businesslive.co.za/fm/special-reports/2019-02-21-jobs-private-sector-the-key-to-job-creation/

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