Summit deal to create 275,000 jobs a year
The final agreement commits government to undertaking that ‘there will be no retrenchments in the public sector’
A deal between the government, labour and business struck at the Jobs Summit on Thursday fell short of agreeing to a moratorium on job losses, but could see the creation of another 275,000 jobs a year.
The summit took place in an environment in which the economy is contracting and shedding jobs with 9.6-million people unable to find work.
The jobless crisis presents a major political risk for President Cyril Ramaphosa, who is struggling to impose his authority on the ANC and is set to face the electorate in less than a year.
The framework agreement contains about 80 pages of detailed interventions — some new and others already announced or repackaged — that it is hoped will help to reboot the economy.
Addressing the summit held in Midrand, Ramaphosa called for a new approach to growth and development, informed by a collective understanding of all social partners.
He announced that he would meet every three months with business and labour in a presidential committee to monitor the implementation of plans and the unemployment crisis.
The forum is considered by all parties to be a major achievement of the summit.
A key point of contention during the negotiations between the social partners was how to deal with job losses, with labour demanding a moratorium in both the private and public sectors. The final agreement commits government to an undertaking that “there will be no retrenchments in the public sector”.
Business agreed “that everything possible must be done to avoid retrenchments” and that alternatives to retrenchment should be followed.
Ramaphosa said: “All social partners have committed themselves to concrete steps to avoid retrenchments and support struggling companies…. 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.”
Business Unity SA president Sipho Pityana said business was comfortable with the final agreement, which had not used the word moratorium. The government also committed itself to “addressing the imperative of filling all critical vacancies in the public sector”, which was another key demand of trade unions going into the summit.
The undertakings on the public service look set to place constraints on the extent to which the Treasury is able to cut the wage bill, an important provision to rebalance the budget towards investment spending.
Credit-ratings agencies have repeatedly warned that they see SA’s burgeoning wage bill as a damper on growth
Public service & administration minister Ayanda Dlodlo said that while there would be no retrenchments in the public sector, early retirement was still on the table.
The filling of vacancies would “obviously increase the headcount”, but would in the main be done through redeployment of individuals to where they were needed.
Treasury director-general Dondo Mogajane said that while critical posts would be filled, the Treasury’s attitude remained that “departmental appropriations must be spent and not exceeded”.
Cosatu general secretary Bheki Ntshalintshali said that labour would take forward the battle around the moratorium in further discussions with business and government.
New interventions that form part of the 80-page agreement include: a commitment by large corporations and government to buy local products; a more aggressive approach to increasing exports; interventions in agricultural value chains, especially fruit, grain and livestock; and support for small and medium enterprises.
Sectoral interventions that have been under way for some time in sectors such as automotive, furniture, and metals and machinery, as well as already announced financing initiatives for black industrialists and farmers and agribusiness, are included in the agreement.
The government also committed to continuing support for its distressed firm fund, housed at the Industrial Development Corporation, and to review the training lay-off scheme, through which retrenched workers are able to access funds for retraining.
The Employment Tax Incentive Scheme, which provides employers with tax breaks for hiring first-time, low-paid youth, is to be extended for another 10 years.