SONA: Five ideas that could create millions of jobs

It is broadly accepted that the focus of this year's State of the Nation will be job creation. While the DA welcomes the ANC administration's new found eagerness to tackle our country's unemployment crisis, we are concerned that the ideas currently on the table amount to "tinkering around the edges" of the massive failure in our labour market.

Instead, President Zuma should commit his government to five simple new ideas in 2011. These ideas will fundamentally reform our labour arrangements to make it cheaper and easier for small businesses to hire more workers.  They represent the only way for the South African economy to come close to creating five million jobs by 2020.

For once the President needs to ignore the narrow, vested interests of his alliance partners and do the right thing by announcing broad and deep reforms of our labour market. Accordingly, we call on the President to make the following five announcements:

1.  The President should put his full political weight behind the youth wage subsidy he announced this time last year. The policy - enthusiastically endorsed by economists across the ideological spectrum - faced kneejerk opposition from the unions, with the result that the discussion document promised in last year's Budget is nowhere to be seen. No issue is a better indicator of the President's willingness to prevent his alliance partners from standing in the way of creating jobs for the 51% of unemployed young people in South Africa. 

2.  The President should announce drastic reform of the wage bargaining arrangements.  This should include repeal of the one-size-fits-all extension of wages that forces small businesses to comply with conditions negotiated by large firms in their sector.  When a DA delegation visited clothing factories in Newcastle, KZN we met with some of the 9500 workers who are so determined to prevent their Bargaining Council from taking away their jobs that they physically threatened the Sherriff when he was sent to close factories down.  We heard how a new wage model that takes into account conditions on the ground is urgently required by these workers, and throughout our economy.

3.  The President should announce the immediate withdrawal of the four proposed labour bills. The Regulatory Impact Assessments commissioned by government concluded that the laws would result in the loss of thousands of temporary jobs, act as a disincentive to employment and destabilise the labour market. The DA believes that workers must always be protected from conditions that compromise their health, safety and dignity, but beyond this non-negotiable position we need to do everything to ensure that it is as easy as possible to create a job, and to get a job, in South Africa. These bills take us backwards, not forwards.

4.  The President should request Parliament to undertake an urgent review of the existing labour laws to relieve small businesses from their more onerous provisions. The definition of "big employer" in the Labour Relations Act should include only those businesses that employ more than 250 workers.  The provisions relating to employment in the Basic Condition of Employment Act should be relaxed for small businesses with fewer than 50 workers.  The job-creating power of thousands of new small businesses will always dwarf that of the state departments that government is unreasonably pressurising to create five million jobs.

5.  The President should intervene in the economic policy standoff that is developing in the Cabinet. The long-established division of responsibility between the Department of Trade and Industry, which focuses on microeconomic interventions, and National Treasury, which has authority over macroeconomic policy, has been upset: the new Department of Economic Development prescribes to both. This has negative implications for industrial policy, government infrastructure spending and national planning.  A Cabinet at odds with itself will not be able to preside effectively over the creation of five million jobs.

In his speech tomorrow the President will probably hail StatsSA's announcement of a small decrease in the number of unemployed workers between the third and fourth quarters of last year as a victory in the effort to drive job creation. What he probably won't point out is that around half of the decrease in the number of the unemployed (259 000) can be attributed to an increase in the number of discouraged work seekers (117 000) who have given up looking for work.

If President Zuma does not embrace fundamental reforms like the ones listed above, then this is the only kind of job creation South Africa can look forward to in 2011: marginal, cyclical and ultimately insubstantial. The ideas in the New Growth Path and the Industrial Policy Action Plan are simply too weak to create millions of jobs, and the Cabinet is too divided to implement them anyway. It is time for the President to lead job creation in South Africa by committing to bold reform of the labour market and backing policies that work.

Statement issued by Tim Harris MP, Democratic Alliance Shadow Minister of Trade and Industry, February 9 2011

Click here to sign up to receive our free daily headline email newsletter