State plans mas­sive jobs drive

State scram­bles to cre­ate em­ploy­ment as poor growth and de­clin­ing com­mod­ity prices force pri­vate sec­tor firms to drop the axe on the work­force

CityPress - - Front Page - HLENGIWE NH­LA­BATHI, SU­SAN COM­RIE and DEWALD VAN RENS­BURG hlengiwe.nh­la­bathi@city­press.co.za su­san.com­rie@city­press.co.za dewald.vrens­burg@city­press.co.za

Eco­nomic De­vel­op­ment Min­is­ter Ebrahim Pa­tel says gov­ern­ment has a plan to deal with what the CCMA says are “un­prece­dented” job cuts which, since April, have seen more than 23 000 peo­ple re­ceive re­trench­ment no­tices.

Af­ter a Cab­i­net lek­gotla on Fri­day, Pa­tel told City Press gov­ern­ment had de­cided that ev­ery depart­ment would cre­ate new jobs by hir­ing peo­ple to work on mas­sive in­fra­struc­ture main­te­nance projects.

“You cre­ate more jobs on main­te­nance than on new builds. So we still will strengthen the new­build pro­gramme, but the big fo­cus will be on main­te­nance,” he said.

“This will en­sure we don’t just build new in­fra­struc­ture, but also save and lengthen the us­able life cy­cle of ex­ist­ing in­fra­struc­ture and cre­ate jobs.”

Fig­ures from the Com­mis­sion for Con­cil­i­a­tion, Me­di­a­tion and Ar­bi­tra­tion (CCMA) show an un­prece­dented num­ber of re­trench­ment no­tices filed in June by com­pa­nies with more than 50 em­ploy­ees.

Be­tween April and June, 23 231 em­ploy­ees were for­mally in­formed of their likely en­trench­ment, 11 901 of whom work on the coun­try’s mines.

Eco­nomic De­vel­op­ment Min­is­ter Ebrahim Pa­tel says gov­ern­ment has a plan to deal with the “un­prece­dented” em­ploy­ment blood bath, which since April has seen more than 23 000 South Africans re­ceive no­tice that they may lose their jobs. Af­ter a Cab­i­net lek­gotla on Fri­day, Pa­tel told City Press that gov­ern­ment has de­cided that ev­ery depart­ment will cre­ate new jobs in earnest by hir­ing staff to work on mas­sive in­fra­struc­ture main­te­nance projects, such as roads, wa­ter in­fra­struc­ture, schools and hos­pi­tals.

“Main­te­nance is your big­gest job driver. You cre­ate more jobs on main­te­nance than on new builds. So we will still strengthen the new-build pro­gramme, but the big fo­cus will be on main­te­nance,” he said.

“When you fix roads and pot­holes, main­tain gravel roads in ru­ral ar­eas, en­sure that road mark­ings are con­stantly re­newed, and that bro­ken win­dows at schools and doors at hos­pi­tals are fixed quickly and ef­fi­ciently, you cre­ate an enor­mous num­ber of jobs.

“The fo­cus will be on main­te­nance to en­sure we don’t just build new in­fra­struc­ture, but also save and lengthen the us­able life cy­cle of ex­ist­ing in­fra­struc­ture and cre­ate jobs,” Pa­tel said.

Un­prece­dented re­trench­ments

Fig­ures from the Com­mis­sion for Con­cil­i­a­tion, Me­di­a­tion and Ar­bi­tra­tion sent to City Press this week show that an un­prece­dented num­ber of re­trench­ment no­tices were filed in June by com­pa­nies with more than 50 em­ploy­ees – the high­est num­ber in the past five years ( see graphic).

Be­tween April and June, 23 231 em­ploy­ees were given for­mal no­tices that they were likely to be re­trenched in the next few months – more than half of these jobs (11 901) are in the min­ing sec­tor.

Pa­tel says gov­ern­ment’s new jobs drive is part of the nine-point plan Pres­i­dent Ja­cob Zuma out­lined dur­ing his state of the na­tion ad­dress in Fe­bru­ary. It is aimed at grow­ing jobs in min­ing, energy and in­fra­struc­ture.

“What we are look­ing at is try­ing to in­crease the num­ber of jobs on a con­sis­tent struc­tural ba­sis – mean­ing not just public em­ploy­ment projects, but both public and pri­vate. We’ve had some fairly sig­nif­i­cant suc­cesses,” he said.

“Since Oc­to­ber 2010, when the New Growth Path – the eco­nomic driver of the Na­tional De­vel­op­ment Plan – was adopted, we have had jobs growth of about 2 mil­lion new jobs.”

Nene tight­ens purse strings

How­ever, Fi­nance Min­is­ter Nh­lanhla Nene told the ANC na­tional ex­ec­u­tive com­mit­tee (NEC) meet­ing last week­end that there had been no real em­ploy­ment gains in the coun­try in the past seven years, and slow eco­nomic growth was not tem­po­rary, but “a new nor­mal”.

“It is un­likely that this will im­prove in the medium term. This has sig­nif­i­cant so­cial and po­lit­i­cal con­se­quences,” he said in a pre­sen­ta­tion.

Nene also warned that if new jobs were to be cre­ated, they would have to come from the pri­vate sec­tor.

“Public sec­tor em­ploy­ment has been the main driver of for­mal sec­tor job cre­ation in the past five years. How­ever, fis­cal con­straints mean this is un­likely to be sus­tained in the next few years,” Nene said.

Six mil­lion jobs

Ear­lier this week, Deputy Pres­i­dent Cyril Ramaphosa said he was con­fi­dent the ANC’s elec­tion prom­ise of 6 mil­lion new job op­por­tu­ni­ties by 2019 was at­tain­able.

How­ever, Chris Ma­likane, a mem­ber of the Na­tional Plan­ning Com­mis­sion and as­so­ciate pro­fes­sor of eco­nom­ics at Wits Univer­sity, said this was a “pipe dream”.

“The deputy pres­i­dent is do­ing his job as a leader. He can’t tell the peo­ple that we are in a jobs blood bath. He will have to give con­fi­dence to the coun­try, but he knows the truth,” he said.

Ma­likane painted a gloomy pic­ture, say­ing the econ­omy would not grow by more than 1.4%, and in­creas­ing lay-offs would mean even more pres­sure would be put on the fis­cus through so­cial grants.

Stats SA’s Quar­terly Labour Force Sur­vey, which was re­leased on Wed­nes­day, shows that be­tween April and June this year, un­em­ploy­ment fell marginally from 26.4% to 25%.

Although pro­posed job cuts in min­ing are un­likely to sub­stan­tially change these fig­ures, the loss of 12 000 jobs will have a dra­matic af­fect on ar­eas such as Rusten­burg and the Eastern Cape.

Min­ing hit hard­est

“This is a blood bath of job losses in the min­ing in­dus­try,” said Na­tional Union of Minework­ers (NUM) spokesper­son Livhuwani Mamm­buru.

The NUM has crit­i­cised min­ing com­pa­nies for not fol­low­ing proper pro­ce­dures in their rush to an­nounce re­trench­ments, and called on Min­eral Re­sources Min­is­ter Ngoako Ra­matl­hodi to with­draw min­ing li­cences from com­pa­nies.

“I think some of the is­sues will def­i­nitely go to court be­cause min­ing com­pa­nies are not ad­her­ing to the due pro­cesses of the law,” Mamm­buru said.

“We feel that where a com­pany is re­trench­ing more than 10% of its work­force ... the depart­ment of min­eral re­sources as a reg­u­la­tor must take their li­cence.”

An­glo Amer­i­can also an­nounced the loss of 53 000 jobs world­wide in the long term. Its Kumba Iron Ore sub­sidiary has al­ready an­nounced it will close its Thabazimbi mine, which will af­fect 800 em­ploy­ees and 360 con­trac­tors.

Af­ter the NEC lek­gotla, ANC sec­re­tary-gen­eral Gwede Man­tashe called on min­ing com­pa­nies to re­con­sider their planned re­trench­ments. He said CEOs’ knee-jerk re­ac­tion to re­trench was both “lazy” and “un­pa­tri­otic”. But min­ing com­pa­nies have hit back. Kumba Iron Ore CEO Nor­man Mbaz­ima told City Press on Thurs­day: “Iron ore prices have moved from an av­er­age of $135 a ton in 2013 to $97 last year to $60 for the first half of this year, and we’re not ex­pect­ing them to re­cover sig­nif­i­cantly. I think there are very, very few in­dus­tries and or­gan­i­sa­tions that can sur­vive in­tact [with] a re­duc­tion in prices of that mag­ni­tude.

“So it’s ab­so­lutely im­per­a­tive that we look at how we do busi­ness in ev­ery sense of the word if we are to be­come re­silient at those low prices,” Mbaz­ima said.

On Thurs­day, An­glo Amer­i­can CEO Mark Cu­ti­fani called on all par­ties to bridge the “trust deficit” that ex­ists be­tween gov­ern­ment, the unions and the min­ing in­dus­try.

“Our cur­rent deep sus­pi­cion of each other is sim­ply not sus­tain­able,” he said.

A min­ing in­dus­try in­sider, who asked not to be named, said that, de­spite South Africa hav­ing one of the

Other jobs on the line

rich­est en­dow­ments of min­er­als in the world, in­vestors aren’t will­ing to in­vest in new min­ing oper­a­tions, which means that jobs lost now are un­likely to be re­placed.

“The mines of the past, where the cap­i­tal has been sunk – they have to make what­ever sac­ri­fices needed to be made to keep pro­duc­ing. But the mines of the fu­ture are never go­ing to be built un­der the cur­rent reg­u­la­tory en­vi­ron­ment – cap­i­tal would rather go to the Demo­cratic Re­pub­lic of Congo than come to South Africa.”

In Fe­bru­ary, the an­nual Fraser In­sti­tute sur­vey of the world’s most at­trac­tive min­ing des­ti­na­tions ranked South Africa a dis­mal 64th world­wide, and 11th in Africa.

Although most pro­posed re­trench­ments are in min­ing, other sec­tors are also in the fir­ing line.

On Fri­day, about 2 000 Telkom em­ploy­ees served their last day with the com­pany af­ter it an­nounced in June it needed to re­trench 4 400 of its 18 441 staff. For now, 2 393 em­ploy­ees have ac­cepted vol­un­tary re­trench­ment and early re­tire­ment pack­ages, but Telkom said it was ex­plor­ing other op­tions, in­clud­ing “wage freezes, up­skilling work­ers, shorter work­ing weeks and flex­itime” to cut costs fur­ther.

In March, SAA an­nounced it would need to cut staff by 10% to bring fi­nan­cial sta­bil­ity to the air­line.

Man­u­fac­tur­ing has also seen the worst jobs de­cline since 2008 of any sec­tor.

In April, steel maker Evraz Highveld Steel and Vanadium went into vol­un­tary busi­ness res­cue, plac­ing the jobs of the Wit­bank-based com­pany’s 2 242 em­ploy­ees at risk. Last week, it sus­pended pro­duc­tion.

“The com­pany has not made a profit since 2009,” CEO Jo­han Burger told City Press. “The low gross do­mes­tic prod­uct growth rate has re­sulted in lower steel de­mand as the min­ing and con­struc­tion in­dus­try min­imises in­vest­ment.

“This low de­mand has been wors­ened by lower steel prices and the in­flux of cheap im­ports from China.”

Evraz has pro­posed go­ing into “cur­tailed op­er­at­ing mode” with the view to restart­ing pro­duc­tion if com­mod­ity prices im­prove. This could save about 1 150 jobs.

Tri­dent Steel re­cently re­trenched 700 em­ploy­ees, while ArcelorMit­tal’s an­nounce­ment this week that it is con­sid­er­ing clos­ing its Vereenig­ing plant could mean dis­as­ter for 1 200 em­ploy­ees.

Lit­tle the ANC can do

For now, the head of the ANC’s eco­nomic de­vel­op­ment com­mit­tee, Enoch Godong­wana, said gov­ern­ment did not have a plan that could ar­rest the spi­ralling num­ber of job losses.

“At this junc­ture, there is no grand plan. This is a com­plex mat­ter. To as­sume you can sit in a room and say ‘here is a plan’ is a mis­take. That’s why I’m say­ing a plan must be a prod­uct of a di­a­logue be­tween the dif­fer­ent stake­hold­ers,” he told City Press this week.

“The plan is to cre­ate the nec­es­sary frame­work with in­dus­try play­ers in var­i­ous sec­tors that will help re­duce the num­ber of jobs lost,” he said.

“The de­ci­sion mak­ers who de­cide who to em­ploy are not in [the NEC lek­gotla], so we will en­gage min­ing houses and rel­e­vant in­dus­tries. We can’t come up with a grand plan with­out talk­ing to them,” he said.

Main­te­nance is your big­gest job driver. You cre­ate more jobs on main­te­nance than on new builds. So we still will strengthen the new-build pro­gramme, but the big fo­cus will be on main­te­nance

EBRAHIM PA­TEL

OP­TI­MISTIC Eco­nomic De­vel­op­ment Min­is­ter Ebrahim Pa­tel

PRES­SURE Fi­nance Min­is­ter Nh­lanhla Nene

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