Statement by Minister Alan Winde ahead of the jobs summit
Tomorrow, government, business and labour will head into President Cyril Ramaphosa’s jobs summit. While we welcome the President’s focus on jobs as a priority, we cannot allow this summit to become yet another talk shop, while the country’s unemployment crisis continues.
Unemployment in South Africa currently stands at 27.2%, while youth unemployment has reached 38.8%. In the Western Cape, our sustained focus on growing the economy and creating jobs, has resulted in an unemployment rate of 20.7%, a full 6.5 percentage points below the national average-despite the province having been in the grip of a sustained drought.
The only way to tackle the unemployment crisis in South Africa is through economic growth. An economy that is not growing cannot create or sustain jobs. While President Ramaphosa’s recent announcement of an economic stimulus package aimed at promoting growth and investment is a good start, we need to be doing much more. South Africans are struggling under the burden of petrol price increases, a VAT hike and could soon see another electricity price hike.
In the Western Cape, our growth strategy, Project Khulisa, identified the fastest growing sectors with the most potential for job creation and we focused our efforts there. Tourism, agri-processing and the oil and gas sectors have the potential to transform our economy, and our focus is paying off. The Western Cape created 40% of all new jobs in South Africa in the second quarter of 2018, despite making up less than15% of the national economy.
Economic growth requires a receptive investment environment. South Africa’s current track record of low growth, ratings agency downgrades and ongoing policy uncertainty around mining and land reform are not making for fertile ground. Red tape makes it hard for investors to invest, and in the small business environment, red tape can make a business sink. When we established our Red Tape Reduction Unit in the Western Cape, we set ourselves a target of helping save businesses R1 billion. We are well on our way to meeting this target. So far, our red tape reduction and ease of doing business interventions have saved R600 million.
Between January 2008 and December 2017, our investment promotions agency Wesgro ensured that the Western Cape secured 299 direct investments, attracting R100 billion worth of FDI and facilitating 19 042 employment opportunities for the region. We’ve seen major international players in the technology and finance space set up offices in the province. Research released earlier this year found that the greater Cape Town area which includes Stellenbosch is home to the most productive tech sector on the continent, with 4500 to 5500 tech start-ups creating up to 50 000 job opportunities. Last month, Cape Town overtook Gauteng as the country’s finance hub in the Global Financial Centres Index. This reflects in our job stats in the finance industry, which grew by 6000 year-on-year, and have shown growth of 77 000 over the past three years.
Tourism is one of the major drivers of job creation in the Western Cape and in the rest of South Africa. President Ramaphosa acknowledged this in his State of the Nation Address and his focus on the visa regime in his stimulus package reflects the importance of the sector. The jobs summit must focus on sustainable ways to grow this industry, especially in the emerging space.
One of the key drivers in growing this sector in the Western Cape has been our focus on expanding the number and frequency of direct flights into and out of Cape Town International Airport through our Air Access strategy, which is a partnership between the Western Cape government, Wesgro, ACSA and the tourism sector. Last month, ACSA attributed its growth in passenger numbers to the air access strategies in place at Cape Town International and at King Shaka airports. Expanding such a strategy to the other international airports in the country can reap rewards.
Since its inception in Cape Town in 2015, this joint venture has added an additional 700 000 inbound seats into Cape Town, opened up 13 new routes, and negotiated 14 expansions. These figures all translate into an increase in the number of visitors to the Western Cape, and most importantly, the creation of new jobs in the tourism industry.
Next month, Cathay Pacific will launch a three-times weekly seasonal direct flight between Cape Town and Hong Kong. A study commissioned by the air access team and conducted by Grant Thornton, anticipates that this new route could create an additional 1 000 jobs in the economy.
The jobs summit must also focus on finding real ways to improve the youth unemployment rate in the country. Youth unemployment is at crisis levels. The StatsSA Quarterly Labour Force Survey has found that unemployment reduces as education levels increase. The key to solving this crisis lies in ensuring young people have access to opportunities to advance their skills.
In Switzerland, which is number one on the INSEAD Global Talent Competitiveness Index, 70 percent of young people are involved in an apprenticeship-based learning system. Using this example, the Western Cape introduced its skills game changer which focuses on ensuring that young people are placed in apprenticeship opportunities, which expand their skills and benefit businesses by boosting productivity and provide tax incentives. Working with TVET colleges, schools and businesses, we aim to place young people into apprenticeship opportunities as a step towards tackling youth unemployment.
Creating jobs is at the centre of solving a number of South Africa’s problems and we hope that the jobs summit takes a hard look at the roles we all have to play in ensuring that South Africans are able to work and create opportunities for themselves to improve their lives.
Spokesperson for the Ministry of Economic Opportunities
(Responsible for the Departments of Agriculture and Economic Development and Tourism)
Tel: 021 483 3550
Cell: 072 372 7044