Download Pushing back the frontiers of poverty and

Pushing back the frontiers
of poverty and
unemployment through
accelerated growth
Economic Strategy for 2003
Presentation to the Portfolio
Committee on Trade and Industry
18 February 2003
1
Background to Microeconomic Reform Strategy
Chronology
• Jan 2001 – Government adopts an Integrated
Economic Action Plan to address specific
microeconomic constraints to growth
• Jan 2002 – Plan is consolidated into
Microeconomic Reform Strategy and
implementation is accelerated
• Jan 2003 – Sharpen implementation of the strategy
focusing on employment creation and poverty
eradication
2
Microeconomic Reform Framework
Input Sectors:
Cross-cutting issues:
Growth Sectors:
Transport
Energy
Telecomms
Water
HRD
Technology and R&D
Access to Capital
Infrastructure
Agriculture
Tourism
Cultural
ICTs
Mining & metals
Clothing & textiles
Chemicals & biotech
Auto & transport
Key Performance Areas
Growth
Employment
Competitivenes
s
Geographic Spread
BEE
SMMEs
Vision 2014
3
SA’s economic performance 1
Eight years of consistent growth
•
•
•
•
2.5% growth per annum 1993 – 2001
0.5% growth in GDP per capita 1993 – 2001
Growth outlook is positive
Mixed sectoral contributions to growth in
output
4
SA’s economic performance 2
Restructured Economy
• Easing of the balance of payments
constraint
• Increasing contribution of manufacturing and
services to GDP
• Increasing productivity and improved
perceptions of SA’s global competitiveness
• Significant increase in exports of
manufactured goods and services
5
SA’s economic performance 3
Growth has not been shared
• Employment still a challenge
• Industry restructuring has involved jobshedding
• Increased casualisation of employment and
associated lowering of incomes
• Growth centered around traditional
economic hubs (GP, WC, KZN)
6
Unemployment
formal sector employment has shrunk 1994 to 2001
2001
Under
employed
14%
1994
Unemployed
(narrow)
17%
Under
employed
21%
Formal
Employment
69%
Unemployed
(narrow)
30%
Formal
Employment
49%
Notes:
•Underemployed refers to domestic worker, informal sector & subsistence agriculture
•Unemployment by broad definition would include ‘discouraged’ workers and increased from
about 28.6% to 41.5%
While informal sector grew substantially over this period, it is now leveling off and even
declining to a small degree.
Source: Labour Force
Survey
7
Labour market status among those aged 15 - 65 years
20.0
Millions
16.2
16.1
11.9
11.8
4.1
4.1
,
15.0
13.5
12.6
11.5
,
10.0
,
'
9.3
11.7
,
9.2
'
,
,
10.4
9.4
'
3.2
3.2
1998
1999
'
5.0
2.2
2.5
&
&
0.0
1996
1997
&
&
'
&
2000
'
&
2001
Labour market status
Ec. active ' Employed&
Unemployed
,
The employed and the unemployed = the economically active population( those aged 15 - 65 years)
The economically active and the not economically active = the
working age population
8
Inequality
Unemployment by Race Group - 1999
87% of the
unemployed are
African
African
87%
White
3%
Indian
2%
Coloured
8%
Source: Labour Force Survey
9
Inequality
Unemployment by age-group
10
Geographic Inequality
Unemployment Rate by Province – 1999
Official
40
35
PERCENTAGE
30
25
Official
20
15
10
5
.P
ro
v
N
ap
e
E.
C
.W
es
t
N
KZ
N
M
P
fri
ca
S.
A
F.
St
at
e
au
te
ng
G
ap
e
.C
N
W
.C
ap
e
0
Source: Stats SA 2002
11
Geographic Inequality
Growth in GDP per province
GDP per Province 2001
L
6.3
MP
0.6
GP
NW
-1.6
Province
3.3
KZN
-0.6
3.6
FS
NC
2.7
5.3
EC
WC
-2
-1
2.6
0
1
2
3
4
5
6
7
GDP
Series1
Source: Stats SA
12
Some assumptions about economic growth 1
Poverty eradication and employment creation can only be achieved if we
accelerate the economic growth rate
Unemployment
Per capita GDP
Growth in GDP
2002
2007
2014
2002
2007
2014
Time
13
Some assumptions about economic growth 2
Growth must lead to employment creation through increased
output and increased labour-absorption
Formal employment trends by sector
5000
4500
Total em ployed '000
4000
3500
3000
2500
2000
1500
1000
500
0
1984
1994
2001
Year
Primary
Secondary
Tertiary
14
Some assumptions about economic growth 3
There is a clear link between educational attainment, work
experience, employment and income
2590
Education Attainme nt
Tertiary
1391
Grade 12 (matric)
951
Incomplete secondary
3422
Informal sector
2091
Formal sector
714
1337
Primary
535
1006
No schooling
0
Source: LFS 4, 2001
6470
2000
4000
6000
8000
Monthly Earnings (Rand)
15
Some assumptions about economic growth 4
There is a clear link between the provision of economic
infrastructure and levels of economic activity
•The provision of infrastructure:
•improves the quality of life of people
•promotes productivity levels in the economy
•reduces pressure on the environment
•is essential for the functioning of markets
•Without adequate and well-maintained infrastructure:
•people are not aware of economic opportunities
•people cannot access and exploit economic opportunities
•economic development is constrained
16
Some assumptions about economic growth 5
A strong and active state is required to place the economy on
a job-creating and redistributive growth trajectory
Institutional Challenges
• Decisive government action and capacity to manage and
implement
• Inadequate reliable and credible statistics
• Insufficient relevant management information for use by public
managers in decision-making
17
Priorities for 2003/4
1. Address critical skills shortages
2. Build on export success
3. Expand the services sectors
4. Provide critical economic infrastructure
5. Expand economic opportunities
6. Strengthen regulation and management of
parastatals
7. Joint planning and implementation by government
departments
8. Boost investor confidence
9. Immediate job creation
18