The State of the Nation Address is one of the most important events in South Africa’s political calendar. Not only is it a rare occasion that brings all three arms of state (the executive, legislative and judicial branches) together, but it is also the executive’s moment to shine; the President, as head of the executive, reflects on, and takes stock of, the country’s domestic situation and external environment, presents a report on the government’s work to date, and charts a common policy direction that binds government departments. In the heyday of the President (Thabo) Mbeki administration, State of the Nation Addresses were centred on a programme of action, which became a useful yardstick to assess the extent to which the government had achieved sets of defined yearly objectives.
President Zuma’s administration has isolated the creation of decent jobs as its primary policy objective and, in the 2011 State of the Nation, announced that all national, provincial and local government departments would align their programmes with the job creation imperative. Pravin Gordhan budgeted the path forward: R9 billion was set aside for a Jobs Fund, R14 billion was given to FET colleges, SETAs were allocated R20 billion, the National Skills Fund was given R5 billion, R73 billion went to the Expanded Public Works Programme, and tax incentives were renewed for manufacturing investment of R20 billion. A number of initiatives followed: a Presidential Jobs Summit was held in March 2011 and a Presidential Labour Summit on Job Creation in April. In July, the cabinet adopted a 12 point implementation plan on job creation, which included an industrial policy action plan.
President Zuma’s administration has isolated the creation of decent jobs as its primary policy objective.
The cabinet also adopted an Infrastructure Commission to be chaired by the President and a Job Creation Commission to be chaired by the Deputy President, Kgalema Motlanthe. In the closing months of the year, Gordhan’s Medium Term Budget Policy Statement proposed a competitiveness support package of R25 billion, and a new National Development Plan under the Planning Commission, proposed the creation of 11 million jobs by 2030.
This is an example of an administration setting about its policy objectives and planning in a clear and coherent manner. How did they fair in 2011? Given an unfavourable global economic climate, the Zuma administration scorecard, as measured by its primary policy objective, is a mix bag.
However, the worsening global economic climate, particularly in South Africa’s major and traditional trading regions of Western Europe, combined with this slow growth, suppressed employment gains. According to the Reserve Bank’s Quarterly Economic Review, real economic growth increased marginally in 2011 with an annual rate hovering around three percent.
However, the worsening global economic climate, particularly in South Africa’s major and traditional trading regions of Western Europe, combined with this slow growth, suppressed employment gains. According to Statistics South Africa’s Quarterly Employment Statistics survey, ‘non-agricultural employment decreased by 377 000 persons from a peak-level in the third quarter of 2008 to the first quarter of 2010.’
In the second quarter of 2011, ‘the economy only regained an estimated 201 000 jobs’ of which 53% were created in the public sector. And the September 2011 Quarterly Employment Statistics survey shows that the number of people employed in the formal non-agricultural sector increased by about 59 000 persons (+0.7%) from June to September 2011. This suggests that despite worsening global conditions, which initially exposed the country’s weaknesses, the Zuma government has embarked on a path of slow recovery. However, there is uncertainty whether this will be sufficient.
A number of variables may affect the ability to steer the ship. First, rising tensions in the ANC may undermine initiatives by the Planning Commission, particularly the National Development Plan. These internal party squabbles are essentially provincial but have a profound impact beyond their localities. They may scuttle Planning Commission initiatives simply because they disagree with the personalities involved rather than the merits of a job creation centred policy framework. Second, slower rates of growth may be insufficient to contain youth unemployment and this may, as rating agencies correctly point out, increase and severely aggravate social tension. These two issues i.e. the extent to which Zuma’s administration ensures its constituency buys-in to the Planning Commission’s job creation strategy, and the rate of economic growth, are the defining challenges going forward. The State of the Nation needs to provide clarity on these matters.