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Friday, 24 September 2010 16:11

Press Release:

Minister of Economic Development’s comments at SACTWU 11th National Congress, Cape Town

Extracts from speech addressing Economic Development areas.

In my new responsibilities I have to look beyond only this sector since my responsibility for economic development covers the economy as a whole, and must address the needs of both business and workers. But I cannot forget the special problems of workers in this sector and am working hard with my colleagues in government to try to limit the loss of jobs and to help to build decent work for our people.

Over the past year, we have built a new Economic Development Department in government, it now has its own budget, offices in two cities, it has employed staff and it has begun to deliver to its responsibilities.

Six agencies now report to this new Department, namely

  •     The Industrial Development Corporation
  •     Khula Finance, which helps to fund small businesses
  •     SAMAF, which supports micro-finance for small enterprises
  •     The Competition Commission
  •     The Competition Tribunal
  •     The International Trade Administration Commission (ITAC).

The Economic Development Ministry has coordinated government’s efforts to respond to the economic crisis and in the process government created new Funds totalling more R11 billion that are available to companies and workers, that has to date saved or created more than 20 000 jobs.

The first of these is a new Training Layoff Scheme that offers workers and employers an alternative to retrenchments. This scheme now has 6 083 workers who participate in the training layoff and has funding of R2,9 billion available.

Government has also set up a R6,1 billion IDC fund for companies in distress, which has provided assistance to companies that resulted in 17 205 jobs that were created or saved in 40 companies.

The IDC has issued a R2 billion development bond for job creation projects, taken up by the UIF, that has to date created or saved 1 204 jobs in 17 companies.

This describes some of the direct interventions as a result of the global economic crisis. Government has also introduced schemes to improve the long-term competitiveness of the sector, using the economic crisis as a spur to move rapidly and the DTI under Minister Rob Davies has been very active in this regard.

A new Clothing and Textiles Competitiveness Programme was announced in the national Budget in February this year. It will allocate R1,75 billion over the next three years to improving the sector’s performance.

The programme has two components – the Production Incentive Programme (PI) and the Clothing & Textile Competitiveness Improvement Programme (CTCIP). Already 10 approvals worth R36 million has been made for the Production Incentive and R82 million has been approved for 94 applicants who employ 13 627 workers.

The Production Incentive aims to improve competitiveness and is “expected to move the industry up the value chain to activities that are far more sustainable than competing against “sweatshop” labour practices”. It provides a grant for companies that can be used for upgrading equipment, developing people and improving manufacturing processes. The grant can also be used to fund working capital, that is the money that companies need to buy their supplies and pay their operating costs.

Minister Davies can tell you more about this programme when he speaks tomorrow, as well as about government’s Industrial Policy Action Plan, the IPAP.

The IDC has also provided funding to companies in the CTF sector from its normal programmes.

In addition to support with capital, government has assisted the industry with trade measures, by increasing tariffs on certain clothing products to the WTO bound rate, and by decreasing tariffs on certain input fabrics through a rebate scheme, to allow local manufacturers in home textiles to be more competitive.

SARS has been very active in acting against illegal imports, seizing about 750 tons of smuggled goods that are estimated to be the equivalent of about 1 200 jobs in this sector. SARS also raided 21 warehouses and 30 shops and agents in February this year.

What these efforts show is that government is ready as a partner to assist the industry in difficult conditions. But we need the industry also to take steps to improve its performance. Government cannot save an industry, it requires a partnership that involves business and labour.

We cannot compete at the very bottom end of the wage market and at the same time provide decent work opportunities, so we need to re-engineer the sector for a different growth path.

SACTWU has already shown a preparedness to deal with difficult challenges. You set up a worker coop in the form of Zenzeleni more than 20 years ago, and the factory is still running strong today, producing work-wear for the commercial market. Running a factory in a difficult industry was a major learning experience for the union some twenty years ago.

More recently, you grasped the difficult issue of investing in your own industry in order to avoid the largest company going bankrupt and laying off more than 10 000 workers. This in turn has created new challenges, of relationships with the management, of the union being associated with hard decisions that are made, of the need for capacity within the union to properly evaluate management’s plans and to come up with viable alternative proposals where needed. When you took that first step of investing in your own industry, you recognised that there were no easy answers and that you will have to develop the answers as you go along. I urge you to debate these challenges constructively and to find solutions that allow you to always protect the interests of workers and the poor.

But the challenges of the present are not simply confined to one company, or one product or one province. Your industry needs a new approach.

We call for an Accord between business and labour in the clothing, textile and footwear sector that will provide a common vision for the industry. Such an Accord must set out real commitments to productivity improvements at workplace level, reducing the wage gaps in the sector and developing a sustainable model for the future.

The industry must firmly embrace the need to move up the value chain, utilise the opportunities of ‘fast-fashion’ that secures competitive advantage through a high-skilled workforce, short run production and quick turnaround times by factories that target fast-changing fashion markets, constant innovation in fashion and product offerings as an industry distinctive feature and a strong logistics and infrastructure hub to rapidly transport goods to market, including for exports. Upgrading technology and promoting strong entrepreneurship in the industry are also important.

Over the past year, government has worked hard to produce a new growth path for South Africa. We must address the de-industrialisation pressures in our economy and build a modern, dynamic economy.

We recognise that we have had high economic growth since the start of democracy. But we also see the evidence of deep poverty, high levels of inequality in our country and huge numbers of unemployed people.

The new growth path is intended to combine economic growth with social equity, to shift our economy step-by-step to a more labour-absorbing path and to combat the high carbon-emissions in the economy.

We have seen major changes in the global economy, with the rise of new economic powers such as China, India and Brazil, as well as a crisis in economic orthodoxy with the global economic crisis that started in 2008. These and other developments provide new opportunities for South Africa, provided we are prepared to be bold.

We have identified jobs that can be created in 10 areas

  •     Infrastructure, including the manufacture of components locally
  •     The green economy
  •     Agriculture, rural development and agro-processing
  •     Mining and beneficiation
  •     Manufacturing,
  •     The knowledge-based sectors
  •     Tourism and business services
  •     The social economy
  •     The public sector and finally
  •     Activities directed at economic relations with the rest of the African continent.

But the new growth path will not be a technical document. We will meet with business and organised labour, and the community constituency, to seek to build a national consensus on what needs to be done and what each partner must do differently to achieve our common goals. That unity of purpose and strong solidarity that is the hall-mark of this movement can be directed in a strong and powerful way on the challenges of development, jobs and government delivery.
The President stated on Monday that a special Cabinet meeting will be held shortly to finalise the new growth path, taking account of discussions in the ANC’s National General Council held this week. That NGC has now ended and a few hours ago President Zuma announced we will forge ahead with that new growth path.