Johannesburg, 21 September 2018 – Business and Government need to work together to increase demand for locally-manufactured products if the creation of one million jobs, in the manufacturing sector, by 2027 is to be realised, Manufacturing Circle CEO Philippa Rodseth said at the Metals and Engineering Indaba, in Sandton this afternoon.
“We need demand side interventions. Without demand, we cannot produce at full capacity, we cannot attract investment and we cannot create jobs. We, therefore, need to increase aggregate demand by buying locally-manufactured gods, replacing imports where possible and increasing local producers’ exports to markets outside South Africa.
Last year, the Manufacturing Circle launched its “Map to A Million New Jobs in a Decade” plan, with the organisation’s chairman André de Ruyter saying at the time: “If manufacturing can expand to 30% of GDP, between 800 000 and 1.1 million direct jobs can be created, with 5 to 8 times that number in indirect jobs,” he added. “Our ‘Map to a Million’ puts forward detailed proposals to deliver a million jobs in manufacturing in the next decade.”
SEIFSA Chief Economist Michael Ade said while the Map to a Million Jobs in a Decade plan was a good one, it was silent on some key points – including the Chinese effect. He said China was increasingly shaping global discourse and economic development including jobs, in key regional and global markets, and will grow in significance within a decade and can’t be ignored.
He said recipients of huge Chinese investments/loans risked piling up dangerous amounts of debt. This, in turn, provides a strategic hold by China over the indebted countries.
“The Chinese loans are often shrouded in secrecy, raising fears that local politicians may benefit more than their people. Chinese projects often make use of lots of Chinese workers (even on menial jobs), increasing their productive efficiency to the detriment of indigenous labourers,” Dr Ade said.
He added that although Chinese investments bring a different flavour and level of enthusiasm in some industries, it was a catch-22 situation in the labour intensive industries of the manufacturing sector (including its diverse M&E cluster), because of its perceived negative effects on job creation.
To mitigate the China effect, Dr Ade proposed that Chinese SOEs, development Banks and its investors partner to collaborate with South African businesses on all fronts in new projects.
“A win-win collaboration should be pursued with the intention of creating jobs and ensuring that locals are given first preference for jobs and where skills are lacking or unspecialised, efforts should be made to train or transfer skills to the locals.”
Dr Ade said the Manufacturing Circle plan also lacked detail on how to directly support black businesses. He said manufacturing needed to encourage and empower the participation of black people in the economy by securing inclusive growth.
Inspite of the plan’s oversights, Dr Ade said it was possible to create one million jobs provided that the China challenge is well managed and provided that beneficiation is systematically pursued across sub-industries within the cluster, with specific focus on upskilling and re-skilling to create new jobs, as some industries were more labour intensive than others.
In conclusion, Dr Ad said South Africa faced extraordinary challenges in dealing with the crisis of unemployment which is compounded by inconsistent growth levels and prevailing low demand. These aspects posed huge challenges in actualising the proposals made by the Manufacturing Circle plan.
“Realising the Manufacturing Circles plan of creating a million jobs in a decade will require a different mindset from captains of industry. It also needs flexibility, co-operation, hard work and above all serendipity,” he said.
Meanwhile, Department of Economic Development Deputy Director General Zeph Nhleko said, the one million jobs didn’t have to come directly from the manufacturing sector but the sector should enable the creation of jobs in other sectors such as the services sector.
Tel: (011) 298 9411 / 082 602 1725
Web: www.meindaba. seifsa.co.za