Ramaphosa’s Job Summit: Here’s What You Need to Know
Unemployment has been an enduring issue throughout South Africa for many years. The Job Summit, a collaboration between business, labour and government, seeks to find solutions to the country’s high unemployment rate. Currently, South Africa’s unemployment rate, which sat at 26.7% in the first quarter of the year, has worsened to 27.2%. This means that over a quarter of the working-age population is unemployed. According to Stats SA, almost 70 000 jobs were lost in the second quarter – 13 000 of those being in the manufacturing sector. And the IMF expects the situation to worsen. The IMF predicts that South Africa’s unemployment rate will reach 28.3% next year. If that happens, it will be the worst unemployment rate South Africa has ever experienced.
Why is unemployment so high?
South African president Cyril Ramaphosa outlines these reasons for South Africa’s high unemployment rate. “The extreme unemployment in this country is the product of an economy that for several decades has been starved of any meaningful investment in its human capital, where most people have been denied the opportunity to own assets or develop skills,” he said. He also notes how state capture has affected job creation, saying that “State capture and corruption has undermined investor confidence and public trust, eroded key institutions of the state and diverted resources intended to support development.”
As such, this Job Summit’s findings and solutions are incredibly important to South Africa’s future. Here are some of the solutions outlined during the Job Summit.
Investments: president Ramaphosa argues that a “substantial increase in domestic demand” would be essential. This would create new jobs and support existing ones. In order to do this, companies would have to avoid retrenchment 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.
The financial sector has committed R100 billion to black-owned industrial enterprises over the next five years in an effort to encourage entrepreneurship. According to Ramaphosa, “Government will work with the financial sector to develop facilities for financing at preferential rates and extended repayment terms.”
The government has also created a framework agreement, expected to create 275 000 jobs annually, over five years and over and above government’s previous commitment to create 300 000 jobs every year. “Through this framework agreement we are demonstrating that we are capable of developing a new social compact for jobs, growth and transformation,” says Ramaphosa.
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