Ramaphosa defends his Sona remarks on job creation
SA needs both a strong and capable developmental state and an inclusive, fast-growing private sector, president says
President Cyril Ramaphosa has defended his remarks during the state of the nation address (Sona) that the task of creating jobs fell on the private sector and not on government, saying SA needs both a private sector that drives growth and employment, and a development state that plays a vital role in economic and social transformation.
Ramaphosa has used his previous state of the nation addresses to drive home the message that government was planning to create millions of jobs to drive economic growth.
However, during his sixth Sona at the Cape Town City Hall on Thursday, he changed his tune, saying: “We all know that government does not create jobs. Business creates jobs. About 80% of all the people employed in SA are employed in the private sector.”
The president said the key task of government is to create conditions that will enable the private sector — both big and small — to emerge, to grow, to access new markets, to create new products, and to hire more employees”. The government had been taking “extraordinary measures to enable businesses to grow and create jobs alongside expanded public employment and social protection”, he said.
DA leader John Steenhuisen, in his response to the Sona, said the president’s address was taken straight from the DA playbook and that Ramaphosa “must now implement”.
Steenhuisen said Ramaphosa’s realisation, “decades too late, that ‘government doesn’t create jobs; businesses create jobs’ ... government must create the conditions that will enable the private sector’ is a considerable departure from his party’s central control-obsessed approach to the economy and jobs”.
“And he is entirely correct in this new assessment,” he said.
In his newsletter on Monday, Ramaphosa said as government worked to grow the economy and create employment, there is much debate about the relative roles of the state and business in pursuing these goals.
“Some people have suggested that we must make a choice between, on the one hand, a developmental state that plays a vital role in economic and social transformation, and, on the other, a vibrant, expanding private sector that drives growth and employment. The reality is that we need both. We need a capable developmental state and a dynamic and agile private sector,” he said.
“We need them to work together and complement each other. This idea is not new. Thirty years ago, in 1992, the ANC adopted a document titled ‘Ready to Govern’. The document set out policy guidelines for a democratic SA and has, over nearly three decades, influenced the policy direction of successive democratic administrations.”
Ramaphosa said in the Sona last week, “I outlined how government, business and labour should work together, each using their unique capabilities, to create jobs. One of the most important drivers of growth and employment are state-owned enterprises (SOEs). They generate electricity, manage the ports, build the roads and supply the water that the economy needs to function”. Since the advent of democracy, these SOEs have significantly expanded access to basic services for the poor, he said.
“That is why a critical part of our programme is to strengthen state-owned enterprises, restoring them to financial health, improving their operational performance and enabling them to play a more prominent and beneficial role in the economy.”
Many SOEs have been hollowed out by years of corruption, looting, mismanagement and maladministration linked to state capture, which have left them bankrupt — some even failing to pay staff salaries — and dependent on government bailouts to continue operating.
In his defence, the president said the government is directly involved in employment creation beyond people employed in the public service.
“The Expanded Public Works Programme, which has been in existence since 2003, has provided work opportunities to millions of people. More recently, in response to the devastating economic impact of the Covid-19 pandemic, this government has overseen the most significant expansion of public employment in our country’s history. The Presidential Employment Stimulus has supported more than 850,000 opportunities in just 16 months,” Ramaphosa said.
“There are many other ways in which government is contributing directly to job creation, including through large-scale investments in infrastructure, the establishment of special economic zones and through support to labour-intensive growth industries,” he said.
“The private sector employs some three-quarters of SA’s workers and accounts for over two-thirds of investment and research and development expenditure. Alongside a capable and developmental state, our country therefore needs a thriving private sector that is investing in productive capacity.”
As private sector employment expands, Ramaphosa said more livelihoods “are supported and sustained. Goods and services are delivered at a greater scale and the democratic state is able to collect more revenue for social development”.
He said SA would not achieve such an economy without both a strong and capable developmental state and an inclusive, fast-growing private sector. “We should not be asked to choose one or the other. We need both,” he said.