Organised business on Thursday gave an undertaking that companies will do everything possible, including cutting executive pay and dividends, to prevent retrenchments and retain jobs.
This, together with a commitment to buy local products and promote exports, is among the interventions that have been planned to deal with the country’s huge unemployment problem.
President Cyril Ramaphosa announced this and a wide range of other plans for job creation. He also signed an agreement with organised business, labour and community representatives for the implementation of the plans.
Ramaphosa was addressing delegates on the first day of the two-day Jobs Summit he is hosting in Midrand, Gauteng.
The stakeholders have been working on the plans since February when Ramaphosa announced his plans to hold a Jobs Summit during his State of the Nation address. They have also agreed on mechanisms to monitor the implementation of the plans, aimed at creating 275 000 new jobs within a year.
Ramaphosa emphasised that this is only the beginning of a process to remove economic stumbling blocks and revive the economy
He looked confident and there was a general mood reflecting the belief that the lack of trust between social partners during the Zuma presidency could now be replaced by cooperation in the interest of the country and for the benefit of its people, particularly the poor and vulnerable.
Several speakers referred to the devastating effect of corruption and state capture on the economy and the stakeholders signed an anti-corruption pledge.
Ramaphosa said all social partners have committed themselves to avoid retrenchments and supporting struggling companies. To this end the Training Layoff Scheme, which was introduced in response to the 2008 global financial crisis, should be immediately revived and improved, he said.
Business and government will establish a rapid response team of experts to assist businesses in crisis and “there is agreement that all possible alternatives and opportunities need to be explored before retrenchment is considered, including executive salary sacrifices and the foregoing of dividends,” he said.
The agreement provides for local procurement by local companies, government and consumers to stimulate local demand. Ramaphosa said the most direct way for South Africans and South African companies to create jobs is to buy only South African products. “This is a message that must reverberate across the country and that must find expression in concrete action,” he said.
The agreement outlines interventions in specific sectors and companies to achieve this goal. Several companies have already made commitments to local procurement, Ramaphosa said. These include Adcock Ingram, AngloGold Ashanti, Clientele, Coca-Cola SA, Edcon, FirstRand, Lixil, Mondi, Nando’s, Nestlé, AB InBev, Sappi, Sasol, Standard Bank and Tsogo Sun.
A further intervention is to aggressively promote export with a priority on labour-intensive sectors like manufacturing, mining, and agriculture.
“Social partners have agreed to unblock impediments to expanding exports – such as inefficiencies at ports and poor knowledge of potential markets – and to ensure greater support to companies seeking export opportunities,” Ramaphosa said.
The agreement deals with financing, which Ramaphosa said will be mobilising finance on a far greater scale, “ensuring that it is focused on building our manufacturing capacity.”
The financial sector, as part of its transformation code, will invest R100 billion over five years in black-owned industrial enterprises, he said. “Government will work with the financial sector to develop facilities for financing at preferential rates and extended repayment terms.”
Other focus areas of the agreement include agriculture and the agro-processing value chain, with plans to expand the area of land under cultivation through land reform, increase the number of people productively working the land, and provide rural dwellers with the ownership and tenure rights needed to unlock the economic potential of their land, Ramaphosa said.
“In addition to government initiatives amounting to approximately R600 million, Agbiz and the Banking Association of South Africa have developed a blended finance model designed specifically to make additional funds available to assist potential redistribution beneficiaries to access capital,” he said.
Other plans include finalising an export tax on scrap metal and a focus on the manufacturing industry in clothing, textiles, leather and footwear, furniture, and the automotive sector.
Social partners will work together to strengthen small, medium and micro enterprises (SMMEs) and ensure implementation of the 30% set aside for them by all spheres of government and their agencies.
Technical training of young people is a priority and will be addressed through partnerships with Technical and Vocational Education and Training (TVET) colleges, where the colleges offer the theoretical component of the programme and companies offer the practical and workplace components. “This is part of a series of initiatives supported through the framework agreement to ensure that graduates are absorbed into the economy,” Ramaphosa said.
He said job creation is part of a virtuous cycle. “Greater employment increases demand for goods and services, enabling established companies to expand and new ones to emerge, thereby creating more job opportunities and greater demand.”
The agreement will further support economic reforms such as the streamlining of water licence applications and the registration of medicines. About R50 billion of public funding will be reprioritised to stimulate job creation in agriculture, township economies and rural areas, Ramaphosa said. “Government has also prioritised the revitalisation of industrial parks, primarily in townships, which will create job opportunities in areas where many of our people live.”
Government will establish a township and rural entrepreneurship fund to support South Africans with businesses in those areas and will fill critical medical posts, including nurses and interns.
The summit ends on Friday.