The Concept Note recognises the following initiatives referred to in the SONA as having an impact on job creation and therefore the job summit

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1 DRAFT FOR CONSIDERATION SUBMISSION BY BUSINESS ON THE JOBS SUMMIT BACKGROUND As announced in the State of the Nation Address, a Job Summit will be held in the next few months. The Summit will be convened under the auspices of Nedlac. The Nedlac Exco has established a two a side task team to a concept note for the Summit. Government has submitted a Concept Note on the topic, which is attached as Annexure 1. The National Development Plan sets an unemployment goal of 14 per cent by 2020 and a labour force participation rate of 60 per cent by 2020 up from an estimated 56 per cent at present, which translates to creation of an additional 11 million jobs by Government s view is that the Summit can provide an opportunity for a conversation about reform and change. It will have to create a shared interest in increasing employment and create appropriate commitments among the social partners to change and innovate. The Concept Note proposes that both the economy and the labour market be taken into account when considering how to stimulate job creation and confirms the purpose of a Jobs Summit as aligning sectors and stakeholders behind the imperative of job creation. The Concept Note recognises the following initiatives referred to in the SONA as having an impact on job creation and therefore the job summit - Convening a financial sector summit - An investment conference to be convened within three months - To move forward with the localization programme and to designate products such as textiles, clothing, furniture and rail rolling stock for local procurement 1

2 - The launch of the Youth Employment Service initiative in March 2018 to place young persons in paid internships with a target of 1 million internships over the next three years - To build a small business support ecosystem and to continue with at least a 30% set aside of public procurement for SMME s, cooperatives, township and rural enterprises - To reduce regulatory barriers for small enterprises - To accelerate the land distribution programme - To enhance support for destination marketing in key tourism markets - To turn the tide on corruption - To strengthen the public service and to ensure a commitment to strong fiscal discipline OBJECTIVES OF THE SUMMIT The Concept Note identifies the following objectives for the summit: Identification of solutions to job creation blockages that each social partner can work on to improve the likelihood of employment. Examples of initiatives that could assist in increasing participation in the labour market are identified as follows: o identifying business opportunities for employment intensive business expansion at the sub-sector level; o an understanding of the challenges faced by each social partner at granular level and finding solutions to unlock the bottlenecks identified in job creation; o assigning roles and responsibilities to the various actors identified in that challenge. Identification of existing policies that could impact on the issues above Delivery of a pro-active strategy to assist those that are completely disconnected from the labour market. 2

3 BUSINESS REACTION General There are two critical enablers of jobs that have to be concurrently unlocked at a sector level economic growth and skills development. While Business accepts the both the analysis and the initiatives presented in the Concept Note there is nothing new in the ideas. All these initiatives have existed for some time and although they may have contributed to employment they are not radical enough, nor sufficiently action orientated to make a serious dent in the 11 million jobs that are required by 2020 to meet the NDP target. Business therefore proposes that an approach to the summit, which ensures that the voices of potential employers on economic growth and skills are heard more clearly than the usual format of Nedlac engagements. It is imperative that sectors and even companies be allowed the space to engage on specific and innovative contributions that can be made to employment. Business agrees with Government that it is important for the summit to deliver new initiatives and not duplicate existing initiatives. However, there may also be cases where existing initiatives could be strengthened. Timing and logistics of a Job Summit in 2018 Timing: Business agrees that the summit must be carefully scheduled and should not be unnecessarily delayed given the President s timeframes provided in SONA. It is imperative that the event delivers concrete implementable outcomes and that the other events planned for the year are appropriately sequenced. It is therefore recommended that the Summit be convened in combination with the Nedlac Summit scheduled for early September Programme options: Business believes that the event must focus on the new initiatives rather than take time at the Summit to reflect on existing initiatives. Reports on issues like: initiatives taken to prevent a downgrade by rating agencies; existing initiatives that impact on job creation; labour 3

4 market reform measures, including the national minimum wage, should be used as a backdrop for the deliberations. More importantly in the lead up to the Summit constituencies and sectors should systematically identify what their key needs are to stimulate employment in pursuit of an agreed set of principles and objectives. This could be supplemented by research for example on: local service delivery impediments to employment. The programme of the Summit should therefore focus on presenting a high level practical action plan from sectors with time lines and responsibilities which has been developed and agreed in the preparatory stages. This should include: o Sector growth and skills action plans o Input to national skills policy (as part of NSDP4) These action plans should cover specific sectoral and sub sectoral actions that can be taken to increase employment. Business proposes the following sectors and subsector engagements: o Agriculture and agro-processing o Mining o Tourism o Manufacturing o Waste economy o Infrastructure o Financial services Budget: Business agrees that a budget will have to be drawn up and a source of funds identified to enable the Job Summit to take place. Business agrees that the Summit can be held under the auspices of Nedlac, but it does not believe that Nedlac has the necessary resources to undertake the preparatory work to support a successful Summit. In addition to making provision for high level facilitation support, note taking and report writing for the event itself the budget must include actual event logistics and the additional costs that may be incurred for the substantial preparatory work required to set the Summit up for success. 4

5 Monitoring: Business is prepared to consider a follow-up mechanism, appropriately funded, resourced by existing Government information sources, that would on a six-monthly basis meet to assess progress and report to the Presidency and / or Parliament. The performance parameters for this purpose must be identified as part of the preparations. Business also believes that the structure of the preparatory engagements should be agreed and proposes an approach as follows: Committee of Principals Technical working groups for each of the sectors and subsectors agreed. Establishment of reporting and monitoring frameworks WAY FORWARD Nedlac to urgently convene the meeting of the two a side preparatory group, which must be chaired by the ED. 5

6 ANNEXURE 1 CONCEPT NOTE: JOBS SUMMIT Introduction The call for a Jobs Summit comes at an opportune moment in South Africa. Although the second quarter of 2016 showed economic growth of 3.3 percent, the outlook for the year continues to indicate very low or zero growth. The country also faces a review by the ratings agencies before the end of the year which could have important consequences for investment, borrowing and debt. The labour market in South Africa continues to face challenges with slow wage growth, retrenchments in many sectors and slow or negative employment change. For many workers, their main struggle is to hold on to employment and to keep their wages growing to support large numbers of dependents. Business confidence is also at a very low level, with some indexes suggesting that it is at the lowest level in ten years in The National Development Plan, on the other hand, sets an unemployment goal of 14 per cent by 2020 and a labour force participation rate of 60 per cent by 2020 up from an estimated 56 per cent at present. The challenges that South Africa faces in 2018 suggests that a Jobs Summit may be a positive step. A Summit can provide an opportunity for a conversation about reform and change. It will have to create a shared interest in increasing employment and create appropriate commitments among the social partners to change and innovate. 2. Economic and labour market context Economic growth is a prime challenge to employment growth, but poor labour market performance also poses a challenge to growth. Both the economy and the labour market should be considered when considering how to stimulate job creation. 6

7 South Africa s economy has recently shown a recovery in growth that has been driven largely by the agricultural sector and to a lesser extent by the mining and manufacturing sectors Key economic indicators for South Africa are the following: South Africa s gross domestic product (GDP) growth rate was 2% in the second quarter of 2017 Household final consumption expenditure increased by 2,0% in Gross fixed capital formation is forecast to rise to 1,6% in 2018 and 2.8% in Net exports contributed positively to total expenditure on GDP. Exports increased by 18,1%, mainly because of higher exports of precious metals and vehicle and transport equipment. Imports decreased by 5,1%, mainly because of lower imports of machinery and electrical equipment South Africa s growth forecast for 2018 has been revised slightly upward to 1.5 per cent from an estimated 1.3 per cent in Key labour market indicators are as follows: Employment as at the end of the fourth quarter 2017 was 16.1 million. Unemployment declined slightly by 1 per cent to 26.7 percent at the end of Formal sector employment declined by whale the informal sector increased by compared to the third quarter of Employment decreased by compared to the first quarter of The largest declines in employment on a quarter-to-quarter basis were in agriculture and mining. The unemployment rate for youth (15 to 34 years) is still very high at 29.7% with 3.1 million young persons not in employment, education or training. 7

8 3. Growth Plans & Strategies The National Development Plan states that to raise employment South Africa needs better educational outcomes, a healthier population, better located and maintained infrastructure, a sound safety net, a capable state and much lower levels of corruption. The NDP sets an unemployment goal of 14 per cent by 2020 and a labour force participation rate of 60 per cent by 2020 up from an estimated 59 per cent at present. The high level numeric target for sustainable and inclusive growth includes the creation of about 11 million additional jobs by The 9 Point Plan adopted by Government in 2014 contains five jobs drivers that are as follows: i. Advancing minerals beneficiation ii. Revitalising agriculture and the agro-processing value chain iii. Growing the oceans economy iv. Implementing a higher impact IPAP v. Unlocking the potential of SMME s, rural and township enterprises. vi. Moderating workplace conflict and establishing a national minimum wage. Progress has been made in each of these areas and a number of jobs created over the past few years. There are also a number of enabling and cross-cutting initiatives in the 9 Point Plan, including for example, the goal of moderating workplace conflict, that have all made progress to contribute to improved conditions for economic growth and job creation. The State of the Nation address by President Ramaphosa (SONA) indicated that at the centre of the national agenda in 2018 will be the creation of jobs, especially for the youth. The SONA indicated that a Jobs Summit will aim to align sectors and stakeholders behind the imperative of job creation. Other commitments and objectives highlighted in the SONA that affect job creation are as follows: - Convening a job summit 8

9 - Convening a financial sector summit - An investment conference to be convened within three months - To move forward with the localization programme and to designate products such as textiles, clothing, furniture and rail rolling stock for local procurement - The launch of the Youth Employment Service initiative in March 2018 to place young persons in paid internships with a target of 1 million internships over the next three years - To build a small business support ecosystem and to continue with at least a 30% set aside of public procurement for SMME s, cooperatives, township and rural enterprises - To reduce regulatory barriers for small enterprises - To accelerate the land distribution programme - To enhance support for destination marketing in key tourism markets - To turn the tide on corruption - To strengthen the public service and to ensure a commitment to strong fiscal discipline These plans and strategies provide a broad framework for consideration. They also signal areas where initiatives are ongoing and where progress has been made. The commitments made in the SONA already represent a contribution by government to the agenda of the Jobs Summit. 4. What kind of a Jobs Summit? The Jobs Summit in 2018 provides an opportunity to focus all social partners in finding a way forward through practical and actionable commitments to create jobs. A real danger facing a Jobs Summit in 2018 lies in focussing on initiatives that may duplicate existing initiatives and interventions. To be successful, the Summit should start from an understanding of the many existing initiatives that are being carried out and that contribute to improving the employment situation. Such initiatives would include the commitments made in the SONA and Budget speech by the Minister of Finance, the work around the President s 9 Point Plan, the Medium Term Strategic Framework, the Operation Phakisa s that have taken place and that are planned, as 9

10 well as very recent initiatives to create over 1 million internships with private sector funding. A primary objective of the Summit should be to identify solutions to job creation blockages that each social partner (government, business, labour, community) can work on to improve the likelihood of employment growth. In particular, Business should be expected to clearly identify those issues that they require to make it easier to increase employment. Similarly, Labour should identify what they require to save jobs and prevent attrition of employment, especially in labour intensive sectors. Community should identify the practical initiatives that could assist in increasing labour force participation. This requires : identifying business opportunities for employment intensive business expansion at the sub-sector level; an understanding of the challenges faced by each social partner at granular level and finding solutions to unlock the bottlenecks identified in job creation; assigning roles and responsibilities to the various actors identified in that challenge. The secondary objective of the Summit could therefore be on to understand which policies exist to deal with the challenges identified, and how to improve them. Which initiatives should be fast tracked. This objective would speak to improving coordination amongst government, business, labour and community constituencies. This stage should also find solutions, and assign roles and responsibilities to the various actors identified in that challenge. Underlying such a consensus should be the goal of enhancing commitment to stimulate employment. The third objective is to deliver a proactive strategy to assist those who are completely disconnected from the labour market. 5. Timing and logistics of a Job Summit in 2018 a. Timing: A Job Summit will need to be carefully scheduled in light of the other initiatives that are taking place during It is proposed that the Job Summit be convened during the first quarter of the financial year taking into consideration the proposed financial sector summit, and the promulgation of the National Minimum Wage. 10

11 b. Programme options: A report-back on the initiatives taken to prevent a downgrade by rating agencies could provide a useful item on the Summit s agenda. An overview of existing initiatives that impact on job creation will be important to ensure improved coordination and lack of duplication. A reportback on labour market reform measures, including the national minimum wage, could also be considered. Inputs by the constituencies to identify what their key needs are to stimulate employment would a key part of the programme, following on the objectives outlined above. c. Budget: A budget will have to be drawn up and a source of funds identified to enable the Job Summit to take place. The budget should also make provision for facilitation support, note taking and report writing. d. Monitoring: Some thought should be given to consider a follow-up mechanism, appropriately funded, located under the auspices of NEDLAC that would on a quarterly basis meet to assess progress and in its report to parliament, recommend possible policy tweaking in order to address emergent issues. 11

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