SA State of the Nation Speech: Zuma unveils plans to tackle growth-sapping labour, power woes President Jacob Zuma placed the growth-sapping issues of labour instability and electricity insecurity at the centre of his post-election State of the Nation address to lawmakers on Tuesday night. He also used the platform to announce a series of new interventions, ranging from a study into the institution of a minimum wage, through to the development of improved housing in mining towns and the creation of a Cabinet subcommittee to tackle the country’s energy constraints. Print Send to Friend 0 0 Zuma also announced that Deputy President Cyril Ramaphosa had been mandated to convene a “social partners dialogue”, through the National Economic Development and Labour Council, to improve relations between government, business and labour, while he would personally oversee the implementation of the “landmark” Framework Agreement for a Sustainable Mining Industry. “It remains our strong belief that the most effective weapon in the campaign against poverty, is the creation of decent work, and that creating work requires faster economic growth,” Zuma told lawmakers, while adding that the current low level of investments was a key constraint to economic growth. “We are determined to work with the private sector to remove obstacles to investment.” The President was speaking against the backdrop of a slew of bad economic news. Only days prior to the address, Standard & Poor’s (S&P’s) Ratings Services cut South Africas foreign and rand-denominated debt ratings by a notch each, to BBB- and BBB+ respectively, while Fitch Ratings cut its outlook for the country to negative, a possible precursor to a future downgrade. In addition, the World Bank lowered its 2014 growth forecast for South Africa to 2%, a sharp pullback from the 2.7% outlook published in June 2013. However, a number of private sector economists do not expect the South African economy to expand by more than the paltry 1.9% achieved in 2013, with some even warning of a ‘technical recession’ should the economy fail to recover from a 0.6% first-quarter contraction during the second quarter. The first quarter was dragged down by a massive 24.7% fall in the contribution of the mining sector, largely as a consequence of a platinum industry strike. The World Bank’s downward revision was made as a result of a combination of tense labour-market conditions, weak electricity supply and tighter monetary policy and was also lower than the 2.3% figure published by the International Monetary Fund in its April World Economic Outlook. In revising South Africa’s rating, S&P also raised the risk posed to the country’s fiscal consolidation path as a result of weak economic growth and the platinum strike. The National Treasury forecast in February that the 2014/15 Budget deficit would be contained at 4% of gross domestic product, with expenditure of R1.25-trillion against revenue of R1.1-trillion. The deficit was expected to fall to 3.6% and 2.8% in 2015/16 and 2016/17 respectively. SELF-INFLICTED Zuma alluded to the fact that much of the cause of the current weak growth climate was self-induced and called on the social partners to meet and find ways to heal the current hostile labour climate in particular. “Given the impact of the untenable labour-relations environment on our economy, it is critical for social partners to meet and deliberate on the violent nature of our strikes and their duration,” he said. But there was also a need to discuss wage inequality and government would, thus, probe a national minimum wage as a way of reducing income inequality. More immediately, Zuma made an undertaking to build housing and other services to revitalise mining towns, such as Motlosana, Emalahleni, Sekhukhune, Lephalale, West Rand and Matjhabeng. An Inter-Ministerial Committee on the Revitalisation of Distressed Mining Communities had been established under the leadership of the Minister in The Presidency Jeff Radebe. The members of the committee include the Ministers of Mineral Resources, Water and Sanitation, Trade and Industry, Social Development, Labour, Human Settlements, Health, Economic Development and Finance. To further promote improved living conditions for mineworkers, government is monitoring the compliance of mining companies with Mining Charter targets, relating to improving the living conditions of workers, Zuma said, while urging the companies to meet the 2014 deadline for the meeting of those targets. But, while business was also deeply concerned about the issue of slowing growth, it had equally indicated a desire for more visible progress on the implementation of the National Development Plan (NDP). The business sector would be somewhat heartened by news that former businessperson, Ramaphosa, would chair the National Planning Commission, after the restructuring of The Presidency and the departure of Trevor Manuel. However, business remained concerned about an absence of full policy alignment with the NDP, which it believed was undermining the certainty and predictability required for higher levels of investment. It was also calling for tangible NDP implementation progress, particularly in the area of infrastructure delivery and especially in dealing with South Africa’s electricity shortfalls, which were viewed as a key obstacle to investment. ENERGY SECURITY In response, Zuma promised to respond “decisively to the country’s energy constraints in order to create a conducive environment for growth”. He argued that a radical transformation of the energy sector was required so as to develop a sustainable-energy mix that comprised coal, solar, wind, hydro, gas and nuclear energy. “We will also need to identify innovative approaches to fast-track procurement and delivery by government in the energy sector.” To prepare the institutional capacity for such a change, government would convert the National Nuclear and Energy Executive Coordinating Committee into the Energy Security Cabinet sub-committee. The sub-committee would be responsible for the oversight, coordination and direction of activities for the energy sector, while also ensuring that Eskom received the support it required to fulfil its mandate. The utility was currently confronting a R225-billion revenue shortfall, which might only be closed through further State injections, or by yet higher tariffs. Zuma again came out in support of nuclear and shale energy, arguing that nuclear had the potential to contribute more than 9 000 MW, while shale gas could be an energy “game changer”. Similarly, the Grand Inga Hydro Power Project Treaty with the Democratic Republic of Congo, was said to have massive and strategic potential. “There are also some urgent activities that we are engaging in, in the short term. Progress at Medupi power station construction site will be accelerated. Plans on the financing of the next large coal fired power station, Coal 3, will be speeded up so that the procurement process can commence.” But the President also gave his backing to the passing of the much-delayed Independent System Market Operator Bill, which some view as key to opening up the electricity market to independent power producers. Creamer Media Reporter
Posted on: Wed, 18 Jun 2014 04:46:22 +0000
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