PERO: Agricultural growth stands out,but youth unemployment requires bold action

Note to editors: Minister Wenger’s full PERO speech can be accessed here, and the full PERO document can be accessed here.

Today, 21 September 2023, Provincial Minister of Finance and Economic Opportunities, Mireille Wenger, tabled the Provincial Economic Review and Outlook (PERO) in the Provincial Parliament, titled:  With the right strategic choices, we will emerge from a cold winter into a hopeful spring.

At approximately 150 pages, the annual publication signals the start of the provincial budget process, providing the evidence base to help guide the upcoming policy choices and responses of the Western Cape government to key issues, particularly for frontline services such as Education, Health and Social Services. The PERO takes into account the global and national context, and the desperate need to enable break out economic growth that will create many more jobs.

“The choices that we are faced with are becoming increasingly difficult, as our fiscal environment becomes increasingly tough. I am however, heartened to see the PERO reflecting the outcomes of our prudent work, ensuring that our tools and resources are applied with the greatest care, respect, and for the benefit of the people of the Western Cape.” said Minister Wenger.

She went on to add that, “Put more plainly, ‘the grass is greener where you water it’, and this reflects our determined belief that it’s the tough choices we make now, based on insights from the PERO, that will go on to help our grass grow, help our economy grow, so that we can create a province in which people prosper, with many more jobs that lift people out of poverty, and into a future budding with prosperity and hope.”

Some of the key information highlighted by Minister Wenger, as contained in the PERO includes:

Employment and population:

• By the first quarter of 2023 the Provincial GDP was estimated to be 0.3 per cent more than in the first quarter of 2020, while employment increased by 6.3 per cent during the same period, highlighting the robustness and resilience of the Western Cape job market.
• With national employment levels still 1.2 per cent below pre-pandemic levels by the first quarter of 2023, the data in PERO shows that young South Africans have undeniably borne the brunt of the country’s significant economic contraction in recent years.
• In the second quarter of 2023, the unemployment rate among youth in the Western Cape was at 31.2 per cent,, but lower than the national youth unemployment rate of 45.3 per cent.
• When those attending formal education are excluded from the working population of the province, the youth labour force participation rate in the first quarter of 2023 rises to 80.9 per cent.
• The provincial population is anticipated to reach 10 million by 2040, growing by an additional 2.7 million people between 2023 and 2040, equating to 123 000 more people per year in the Western Cape.

Exports and investment:

• Between 2012 and 2022, the Western Cape experienced a notable cumulative real export growth of 42.4 per cent.
• The Western Cape’s Agriculture sector accounts for more than half of South Africa's agricultural exports, and was the primary driver of this export growth, recording a remarkable 219 per cent growth.
• Greenfield investments in 2022 were 25 per cent higher than the average over the last decade. In 2022, the Western Cape received R13.3 billion in greenfield investments that created 2 315 employment opportunities. This equates to 0.7 per cent of the jobs created in the Province.
• Since September 2022, Cape Town Air Access powered by Wesgro, the province’s trade, tourism, and investment promotion agency, added seven new airlines to the Cape Town International Airport schedule and seven new routes.
• This has contributed to a 100 per cent and above passenger recovery from January 2023 onwards, when compared to 2019 levels.
• The airport was served by 21 airlines flying to 27 destinations globally, with 199 flights per week during the 2022/23 summer season.

Education:

• Over the last 5 years, there has been a notable improvement in learner retention for both primary and high school cohorts. This positive trend suggests a decline in dropout rates and an increasing number of learners successfully completing their education.
• We have also seen the devastating impact of the COVID-19 pandemic on systemic test results for Grades 3, 6, and 9, revealing sustained declines, highlighting the urgency and importance of targeted interventions, such as the provincial Back On Track programme.

Health:

• Over the past decade, the Western Cape has seen encouraging growth in the number of public-employed doctors per 100,000 people, from 43.4 in 2013/14 to 45.9 in 2022/23. However, over the same period, the growth in public-employed nurses has not kept up at the same pace.
• Community-oriented primary health care, which took healthcare directly to residents’ homes through outreach programmes and efficient medicine delivery, including home delivery and tele-healthcare, has reduced healthcare facility visits.

Well-being:

• The Human Development Index improvement suggests that, on average, the Province is making progress in education and healthcare outcomes. However, worsening income inequality, combined with slow economic growth, shows that the only way we are going to be able to lift more people out of poverty is by dramatically growing our economy, to create jobs.

Safety:

• Crime trends in the Western Cape over the past decade have seen significant improvements in certain crime categories on a per capita basis such as sexual offences, drug-related crime and driving under the influence of alcohol or drugs. However, there has been a concerning increase in murder of 34.2 per cent and robbery at residential premises up by 36.2 per cent, over the last ten years.
• This has led to the implementation of a targeted intervention in the form of the LEAP programme. Following the implementation of LEAP, there has been a notable decrease in the average number of crimes reported in the 13 quarters of LEAP implementation compared to 13 quarters before LEAP implementation.

Speaking on youth unemployment, Minister Wenger said: “We are determined to enable and unleash the full potential of our young people because, when we get this right, nothing will hold them back from making a substantial impact on the national economy, and we want that impact to start with the youth of the Western Cape. We are leveraging every available resource to support young job seekers to access work, to gain meaningful skills and practical experience to set them on a path of personal and, ultimately, provincial growth.”

Significant challenges and constraints impacting economic growth include the electricity catastrophe, the inefficiencies at the Port of Cape Town and logistics in general, combined with stagnant economic growth and increases in the cost of living, impacting the most vulnerable residents.

“PERO shows us that the Western Cape is getting traction on employment growth and that there are opportunities that can create more prosperity and hope if we make the right choices. As government, we are more determined than ever to make the tough trade-offs that enables the breakout economic growth we need to lift many more people out of poverty.” said Minister Wenger.

In closing, Minister Wenger dedicated her speech to the young people of the Western Cape, saying that: “It is for you that we will continue to push on, to drive forward and make the tough choices now. We will do this so that we can emerge from a bitter winter by enabling the breakout economic growth we need, to truly usher in an abundant spring, full of possibility and opportunity. And we will do this so that your tomorrow, is better than our today.”