JOB CREATION AND
INFRASTRUCTURE
IN SOUTH AFRICA
March 2011
CLGF Conference (Cardiff)
SALGA
Economic Development
And Planning
Mayur Maganlal
CONTENTS
•
•
•
•
•
Introduction
Unemployment Challenges
Role of Capital Investment in Infrastructure
Expanded Public Works Programme
The case of Ehlanzeni (Limpopo Province)
INTRODUCTION
•
•
•
•
•
Traditional LED is focused on “creating the enabling business environment”,
given the vast poverty and unemployment challenges but current
administration is taking a more proactive / focused / interventionist stance
Job creation, public investment and rural development emerged as key
points in finance minister Pravin Gordhan’s budget 2011 speech
The SA government pursues its New Growth Path (NGP) which includes a
focus on infrastructure spend
– Energy, transport (road construction and maintenance), communications,
water, education and housing
Industrial Policy Action Plan (IPAP2) to support key sectors and more
focused use of government procurement to create jobs
National Programmes such as EPWP affect all spheres of Government to
invest in infrastructure projects and job creates:
–
–
–
–
–
Labour Intensive Construction methods
MIG Funds
For new projects and maintenance
Incentives based on performance
For LG, capital investment is often an easier than doing “LED”
UNEMPLOYMENT
CHALLENGE
Millions
The jobs challenge
32
Working age population
growth (1980-2009) =
28
gap =
unemployed
+ not
participating
24
20
16
Labour absorption (Percentage
of people aged 15-64 who are
employed) (ILO)
South Africa
41,3%
Egypt
43,2%
India
55,6%
Argentina
56,5%
South Korea
58,1%
Malaysia
60,5%
Brazil
63,9%
China
71,0%
Labour Force growth
(1980-2009) = 1.9%
12
8
1980
1985
1990
1995
2000
2005
Confidential
4
GLOBAL ECONOMIC
CRISIS : THE NATIONAL
RESPONSE
Countercyclical Fiscal &
Monetary Policy
‘Stimulus Package’ (NEDLAC/Presidency)
Investment in
Infrastructure
Macroeconomic
Policy
Industrial &
Trade Policy
Employment
Measures
Social
Measures
•Transport (road,
rail, public
transport, port
operations);
•Water, dams &
sanitation;
•Housing;
•ICT;
•Electricity;
•Health &
education;
•Counter-cyclical
(expansionary)
fiscal policy
•Reducing real
interest rates;
•Competitive
exchange rate;
•Tax relief to lowincome
households and
companies in
distress;
•‘Rescue package
for vulnerable
sectors (clothing, textile,
•National Jobs
Initiative (R10 bn);
•Support where >
50 retrenchments;
•Expand Public
Service (education,
•Industry-level social
plans;
•Improved UIF
benefits;
•Emergency Food
Relief;
• Support community
food production.;
•Access to FBS;
•Social Grants (CSG to
age 18, pension for
men from age 60);
•Promotion of
Cooperatives;
R 787 bn
2010 - 12
autos, mining, capital
equipment, retail, housing
construction, private
services);
• Support for SMMEs
in crisis;
•‘Green’ industries;
•Local procurement;
•Trade: tightening
import controls.
health, social work,
CJS);
•EPWP II: 2 million
full-time
equivalent jobs;
•Training & skills
development, incl.
training the
retrenched;
NO Reference to either the local or provincial spheres
Global
Coordination
•Improve global
Economic
coordimation;
•Prudent regulation
of SA capital
markets;
•G20 as platform to
enhance stability in
fin mkts;
•Use IFIs to finance
counter-cyclical
policies in
developing
countries.
GLOBAL ECONOMIC
CRISIS : THE NATIONAL
RESPONSE
Overarching Priority: To implement counter-cyclical policies that are customised for
the locality, through a dedicated ‘local stimulus package’, to mitigate the negative
impacts, and to position the local economy for recovery
Investment in
Infrastructure
•EPWP,
• Municipal “shovel
ready” Infrastructure
Projects;
•2010 projects
Industrial
Policy
Employment
Measures
•Advice to corporates
and SMMEs & support
to access rescue
packages &
concessionary credit,
Local procurement
•Employment
programmes to
absorb retrenched
workers, leveraging
on National Jobs
Initiative;
•Retraining
Surveillance of local economy
Partnership: civil society & private sector
Ongoing Communication
Social
Measures
•Support to
communities and
households in
distress through
partnering with NGOs
& the private sector
(CSI)
New Growth
Path Drivers
1. Address cost drivers and inflationary pressures
across the economy
2. Active industrial policy based on increasing
competitiveness and targeting sectors that can
create employment directly and indirectly
3. Comprehensive rural development
4. Stronger competition policy
5. Stepping up education and skills development
6. Enterprise development
7. Reform of Broad-Based BEE
8. Reform labour policies to support productivity and
improve protection for vulnerable workers
9. Technology policies geared to improving
innovation in ways that support employment
creation and small- and micro-enterprise
10. Developmental trade policies with a strong
orientation to new growth centres
11. Investment to support African development
SoNA:
– R9 billion in the Jobs
Fund over the next 3
years – public
employment schemes
plus subsidies to
private employers
– R10 bn from the IDC in
next 5 years for jobcreating projects
– R20 billion in
investment subsidies
– Comprehensive
support for SMEs
7
STATE OWNED
ENTITIES - ESKOM
• Major plants located near coal reserves, with
localised employment effects
– Should create 2000 new jobs in the coming year
• Main employment impact from maintaining
electricity supply across the country
• Also create jobs in all provinces through
– Procurement from build programme
– Electrification programme
– Municipal electricity maintenance
EXPANDED PUBLIC
WORKS PROGRAMME
(EPWP)
Nation-wide programme which will draw
significant numbers of the unemployed
into productive work, so that workers
gain skills while they work, and
increase their capacity to earn an
income
EPWP OBJECTIVE
To utilise public sector budgets to
alleviate unemployment
WHAT IS AN EPWP
PROJECT
•
•
Deliberate attempt by the public sector body
to use expenditure on goods and services to
create work opportunities coupled with
training for the unemployed
Projects usually employing workers on a
temporary basis (either by government, by
contractors, or by other non-governmental
organisations), under code of good practice
for SPWP or learnership employment
conditions
AREAS OF
OPPORTUNITIES FOR
EPWP
• Increasing the labour intensity of governmentfunded infrastructure projects
• Creating work opportunities in public environmental
programmes (eg Working for Water)
• Creating work opportunities in public social
programmes (eg community health workers)
• Utilising general government expenditure on goods
and services to provide the work experience
component of small enterprise learnership /
incubation programmes
BACKGROUND TO
EPWP PHASE 1
• The first phase of the Expanded Public Works
Programme achieved its 1 million work
opportunities targets a year ahead of schedule
• The second phase of the EPWP to scale up
further to contribute significantly to halving
unemployment by 2014
• EPWP was projected to grow to three times it
current size within the next 5 years
• EPWP 2 implementation to start on 1 April 2009
KEY ENHANCEMENTS
EPWP 2
• EPWP Employment Creation Targets
• EPWP Wage Incentive
• Sector Programmes
o Introduction of the Non-State Sector
(community)
• Increasing Technical Capacity and Support
• Funding
Grant/ Allocation
Municipal Infrastructure Grant
Local
 2009/10: R202 million
 2010/11: R554 million
 2011/12: R1.1 billion
KEY ELEMENTS OF
PHASE 2
• Overall Phase 2 targets will be distributed across
all spheres of government over a five year period
based on projects/programmes
• The EPWP incentive is based on paying all public
bodies that create work above a minimum
threshold for the EPWP target group an incentive
of R50 per day for every day of work created
Phase 2 targets in Full Time Equivalents broken down
per sphere of government
Local
Provincial
National
Non-State
Totals
2009-2010
60 548
117 554
22 698
8 696
209 496
2010-2011
72 658
136 630
28 999
20 870
259 156
2011-2012
94 939
181 667
40 991
41 739
359 337
2012-2013
122 549
243 527
56 272
76 522
498 870
2013-2014
152 581
320 692
76 570
130 435
680 278
Totals
503 275
1 000 070
225 531
278 261
2 007 137
INFRASTRUCTURE
SECTOR
Infrastructure Sector
Project based employment in capital works
Potential for long term employment
programmes in maintenance works
OBJECTIVES FOR
INFRASTRUCTURE
SECTOR
• Both the programme and budgets of the EPWP
have multiple objectives:
– Eradicate backlogs and create employment
– Provide social services and create employment
– Taken existing programmes, and institutional setups
and required additional job creation:
– Municipal official who previously build roads, now has
to still build roads, but must also create jobs
– Lot of energy focused on changing how existing
programmes are implemented, not establishing new
institutions with the purpose of doing things more
labour-intensively
EPWP REPORT FOR
EHLANZENI DISTRICT
MUNICIPALITY
L
I
P
R
M
O
P
V
O
P
O
I
N
C
E
Satara
! Swadini
Talamati
! Burgersfort
M
MP
PD
DM
MA
A 33 22
M
MP
P 33 22 55
! Ohrigstad
Kruger National Park
Bushbuckridge
! Pilgrim's Rest
! Graskop
MOZAMBIQUE
Skukuza
Lydenburg
!
! Hazyview
M
MP
P 33 22 11
Thaba Chweu
E
H
KRUGER NATIONAL PARK
! Sabie
L
A
Lower Sabie
N
Z
White River
E
Pretoriuskop
N
I
! Kabokweni
!
M
MP
P 33 22 22
Crocodile Bridge
Berg-en-dal
! Komatipoort
Mbombela
!PNELSPRUIT
N k a n g a l a
M
MP
P 33 22 44
M
MP
P 33 11 44
! Belfast
Nkomazi
! Machadodorp
M
MP
P 33 22 33
Umjindi
!R Barberton
M
MP
P 33 11 33
M
MP
P 33 00 11
G e r t
!
! Badplaas
S i b a n d e
SWAZILAND
EHLANZENI DISTRICT:
STATUS REPORT
Summary of EPWP performance
-
Number of projects = 25
- Expenditure = R78,953,542
- Planned jobs = 800
- Actual Jobs = 976
» Youth
» Women
» Disabled
=
=
=
388
581
7
- Training
» Accredited
» Non-accredited
=
=
2105 person/days
1405 person/days
EHLANZENI DISTRICT:
STATUS REPORT (08-09)
EMPLOYMENT
PROJECT NAME
LM
BUDGET
YOUTH
WOMEN
DISABLED
TOTAL
Nyathi WTW
NLM
R38,000,000
24
18
3
43
Mangweni Bulk Supply
NLM
R1,500,000
16
16
1
42
Buffelspruit Bus Route
NLM
R6,010,000
14
22
1
37
Goba Bus Route
NLM
R3,490,000
15
25
0
45
Msogwaba Bus Route
MLM
R3,097,773
10
8
1
19
EHLANZENI DISTRICT:
STATUS REPORT (08-09)
EMPLOYMENT
PROJECT NAME
LM
BUDGET
Backdoor taxi & bus
route P2
MLM
R2,500,000
Zwelisha B Water
Supply
MLM
Nsikazi North Water
Network
MLM
Roads & Stormwater
infrastructure –
Shabalala P2
MLM
TOTAL
YOUTH
WOMEN
DISABLED
TOTAL
24
17
1
32
35
22
0
57
53
40
2
95
25
12
0
37
216
180
9
407
R3,500,000
R1,642,627
R1,000,000
EHLANZENI DISTRICT:
CHALLENGES
• Have not reached our full potential in
implementing the EPWP program
• No unit dedicated to EPWP activities
• Planning
• Infrastructure sector active, however
economic, social & environmental/culture
sectors not reporting on activities