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The New Growth Path

The New Growth Path framework

Government, under the leadership of Minister Ebrahim Patel, on 23 November 2010 released the Framework of the New Economic Growth Path aimed at enhancing growth, employment creation and equity. The policy’s principal target is to create five million jobs over the next 10 years. This framework reflects government’s commitment to prioritising employment creation in all economic policies. It identifies strategies that will enable South Africa to grow in a more equitable and inclusive manner while attaining South Africa’s developmental agenda.

Central to the New Growth Path is a massive investment in infrastructure as a critical driver of jobs across the economy.

  • The framework identifies investments in five key areas namely: energy, transport, communication, water and housing. Sustaining high levels of public investment in these areas will create jobs in construction, operation and maintenance of infrastructure.
  • The new growth path sees the infrastructure programme as a trigger to build a local supplier industry for the manufacture of the components for the build-programme.
  • Specific measures, particularly changes to procurement policy and regulations, are identified to ensure that this is achieved. Risks include the still fragile global recovery; competition and collaboration with the new fast-growing economies; and competing interests domestically.

The New Growth Path identifies five other priority areas as part of the programme to create jobs, through a series of partnerships between the State and the private sector.

  • Green economy: expansions in construction and the production of technologies for solar, wind and biofuels is supported by the draft Energy on Integrated Resource Plan. Clean manufacturing and environmental services are projected to create 300 000 jobs over the next decade.
  • Agriculture: jobs will be created by addressing the high input costs and upscaling processing and export marketing. Support for small holders will include access to key inputs. Government will explore ways to improve working and living conditions for the country’s 660 000 farm workers. The growth path also commits the Government to unblocking stalled land transfers, which constrain new investment.
  • Mining: calls for increased mineral extraction and improving infrastructure and skills development. It focuses support for beneficiation on the final manufacture of consumer and capital goods, which can create large-scale employment. It foresees the establishment of a state mining company concentrating on beneficiation and enhanced resource exploitation in competition with a strong private mining sector.
  • Manufacturing: calls for re-industrialisation in the South African economy based on improving performance through innovation, skills development and reduced input costs in the economy. The document targets a doubling of South Africa’s research and development investment to 2% of gross domestic product by 2018.
  • Tourism and other high-level services: hold employment potential and the framework calls for South Africa to position itself as the higher education hub of the African continent.

Smarter coordination between government and stronger partnerships with the private sector and organised labour will galvanise our resources in achieving the aims of the New Growth Path.

  • Government calls on every South African to contribute to building our nation over the coming 20 years to ensure a collective effort, creativity and solidarity.
  • Good leadership and strong governance are critical in ensuring that South Africa takes charge of the new opportunities. Government commits to cut wasteful spending, tackle corruption and align the allocation of public money with developmental priorities.
  • Government recognises that job targets can only be achieved if the State performs better and if the private sector grows in labour-absorbing parts of the economy.
  • The New Growth Path identifies measures to strengthen the capacity of the state and enhance the performance of the private sector to achieve employment and growth goals.

The New Growth Path proposes major improvements in government, with a call for slashing unnecessary red tape, improving competition in the economy and stepping up skills development.

  • The role of government departments and agencies in meeting set targets for scarce and key skills is critical. This emphasis on skills applies across the economy and will be a centrepiece of partnership with business and labour.
  • Key targets include the aim to produce 30 000 engineers by 2014, with a focus on Mathematics and Science as well as changes to university funding formulae to achieve this, and 50 000 artisans by 2015, with annual targets for Eskom and Transnet and for individual Sector Education and Training Authority institutions to achieve this.
  • The document calls for greater focus on workplace training, targeting on-the-job training and refresher programmes for 10% of the workforce every year.
  • It also calls for measures to make it easier to import scarce skills by streamlining the work permit and visa system. This will be accompanied by a skills transfer programme to ensure that local skills development is enhanced.

The framework identifies a “development package” – a coordinated set of actions across a broad front, this consists of macroeconomic strategies, microeconomic measures and stakeholder commitments to drive employment and economic growth.

  • The document recognises the challenges of an uncompetitive currency and sets out clear steps for government to address the impact of the Rand on the economy.
  • In expanding on government’s tools to address inflation, a stronger role will be considered for competition policy and strategic investigations into conduct leading to high and volatile prices for intermediate inputs for producers and basic consumer goods, including important commodities such as maize, steel and fertilisers.
  • Government calls for greater focus by South African business on opportunities in Africa’s fast-growing economies. This is accompanied by commitments to improve cross-border infrastructure and measures to address unnecessary regulatory obstacles to the movement of people and goods, as part of building a common market on the continent.

Publications

Source: Bua Briefs - 17 of 2010, 8 December 2010