S.Africa’s Ramaphosa announces plan to reduce sky-high unemployment

JOHANNESBURG, Oct 4 (Reuters) – South African President Cyril Ramaphosa announced a wide-ranging set of deals between government, big business and labour on Thursday that he said would create 275,000 more jobs a year – part of efforts to reduce sky-high unemployment and lift growth.

More than two decades after the end of white-minority rule, South Africa still has one of the highest jobless rates among major global economies, with more than a quarter of its workforce unemployed.

Ramaphosa, who took over from scandal-plagued Jacob Zuma in February, has made boosting job creation a cornerstone of his reform drive. But his efforts were dealt a blow last month when data showed the economy had fallen into recession for the first time in a decade.

The scope of the agreements covering sectors including agriculture, manufacturing and mining would have been unthinkable in the Zuma era, when confidence between government and business deteriorated because of policy uncertainty and a spate of corruption scandals.

“Unemployment is the greatest challenge facing our country,” Ramaphosa told a gathering of top officials, business leaders and trade unionists outside Johannesburg.

“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.”

Ramaphosa, a former trade union leader who played a central role in talks to end apartheid in the early 1990s, is known for his ability to broker complex deals. But he has been constrained by the weak state of South Africa’s public finances and by infighting in the ruling African National Congress.

Ramaphosa said jobs would be created through a commitment by top public and private firms to increase local procurement and a government-led export drive for manufactured and processed goods.

He said a deal had been reached whereby businesses would explore all possible alternatives before firing staff, including cutting executive salaries and foregoing dividend payments.

Other agreements included interventions aimed at raising the quality of training, 100 billion rand ($6.8 billion) of financial sector investments in black-owned industrial firms, and an extension of tax incentives for companies creating jobs for the youth.

Ramaphosa said the government saw potential for additional jobs by expanding agricultural exports, distributing productive farmland to black farmers and promoting special economic zones to overseas investors.

Officials had also agreed to finalise an export tax on scrap metal and ensure better access to incentives like the Downstream Steel Industry Competitiveness Fund, the president added.

International organisations including the World Bank have been calling for decisive action to address South Africa’s high levels of unemployment and inequality for many years.

Ramaphosa’s jobs plan follows a “stimulus and recovery plan” announced last month.

That plan was criticised by ratings agencies as unlikely to boost growth in the short term. But others, including Goldman Sachs, said it could have a positive impact in the longer term.

($1 = 14.7075 rand)

(Reporting by Alexander Winning and Olivia Kumwenda-Mtambo; Editing by Mark Heinrich)

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