When it comes to saving jobs, Ebrahim Patel’s department hasn’t been industrious
The department has multibillion-rand industrial incentive programmes, and yet we have heard little about using them in the time of Covid-19
Love it or hate it, we can all agree that the Covid-19 lockdown has had a severe social and economic effect. Many would agree with me that a major aim of the government needs to be to nurse the economy through this period, preserving as many jobs as possible to prevent the measures taken to contain the pandemic from having a crippling effect on SA’s economic performance in the years to come.
Jobs are the key. If we can keep people employed in the bad times we will be better prepared for the recovery, however slow and unsteady that might be. President Cyril Ramaphosa introduced a R500bn stimulus package to try to dampen the effect of Covid-19, and while it has its flaws, it has made a difference.
There was R200bn for a bank loan guarantee scheme, which has been slow to crank up, but which does offer some hope to struggling businesses. There has been the R40bn temporary employer relief scheme (Ters) fund — already spent, but hopefully to be topped up — to pay the wages of workers who would otherwise have been laid off. They don’t all get what they had been earning before, but the aim is survival, not luxury. The latter is the privilege of the bootleggers, the true beneficiaries of the pandemic.
Further relief of R70bn comes from tax deferrals, which include a four-month holiday for companies that pay skills development levy contributions, fast-tracking of VAT refunds and the granting of a delay for filing and paying the carbon tax.
On top of all this is the R50bn in social grants, which do not have a direct effect on employment but do help prevent starvation of our most vulnerable, and will play a small part in keeping the wheels of the economy turning.
So far, so good. But what has been the role of the department of trade, industry & competition to support industry? The minister, Ebrahim Patel, was involved in detailed work on the lockdown, gaining most (unwanted) attention for his fine-tuning of the regulations on which items of clothing could and couldn’t be sold.
However, his department has been pretty quiet about the vitally needed measures to stimulate and sustain employment, despite it managing several programmes that support the creation of jobs. The Industrial Development Corporation (IDC) and National Empowerment Fund (NEF) answer to the minister and have been offering funding. But what about the other lenders among myriad agencies that fall under the department?
Patel has access to several levers to support investment and industry, and the relative silence about them is a concern. The department has multibillion-rand industrial incentive programmes, and yet we have heard nothing about ways in which these are being targeted and expanded to support industry through these scary times.
The government is proud of its black industrialists scheme (BIS), yet the minister has not told us how his department has made sure people who have started investments with BIS backing are being supported to stay afloat, or how it has supported them to create and sustain new jobs.
Many of these incentive programmes have job-sustaining requirements. These are unlikely to be met by a number of companies. Why is the department not giving some certainty to applicants that they will not lose their approved incentive due to job losses that are not of their creation? If the department can do more, it should.
As someone who spends a lot of time acting as a bridge between applicants for incentives and the state, I am concerned that in the last five months there has not been much movement from the department to speed up the paying out of incentives. All we have heard is that it has relaxed some of the claim submission deadlines. Why has there been no communication about the acceleration of claim payments? Businesses need the cash.
Food production is more vital than ever during the pandemic, and yet agro-processing support is moving at a snail’s pace. For the last five months we have seen no movement on these incentives.
The agility and responsiveness of the department of employment & labour during the implementation of the mammoth Ters scheme was quite impressive, despite severe teething problems. Industry appreciates the accessibility of this department, its willingness to engage and to find solutions together with business.
I can’t say the same of the department of trade, industry & competition, which is quite a concern. Are the department’s officials in lockdown themselves? The big challenge is how we retain employment, as opposed to just using the temporary Ters programme, which will come to an end soon.
We have seen that Ters has been a relatively successful instrument through which the government has managed to preserve jobs, but other instruments, such as incentives from the department, have not been used effectively to assist with sustaining and stimulating job creation. When I look at other jurisdictions, I see how efforts are being made with regard to reskilling and retraining people.
We in SA need to ensure that policy instruments such as the sector education and training authorities (Setas) and the Jobs Fund are utilised to accelerate training of youth in new areas such as the fourth industrial revolution. The bottlenecks around these funding instruments and the time frames to access them also need to be improved.
Ters has shown it can be done if there is the will. But while Ters was a good response, we now need a bigger and wider thrust — not just from the government, but with business and labour working alongside it. It is happening, but is there enough urgency?
We need more action from every government department in the crusade to keep our people employed and our economy from collapsing. Instead of dragging its feet, the department of trade, industry & competition should be leading the charge.
• Marumo is an associate director at Cova Advisory.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.