Jobs, jobs, jobs, jobs! It’s been a recurring message from the government over the past year, but figures in the budget tell a different story.
While R845-billion has been allocated for infrastructure, only R6.2-billion has been set aside for South Africa’s greatest need: job creation — down from a R10-billion allocation last year. Key employment programmes will receive less funding than they expected in coming years.
The Budget Review said: “In order to improve labour absorption, the newly created Jobs Fund has committed more than R1-billion and the budget for the community works programme is being expanded.”
But it is these very mechanisms that have experienced funding drawbacks.
Due date to achieve Jobs Fund’s objectives extended
The R9-billion Jobs Fund, announced last year and implemented by the Development Bank of Southern Africa, was expected to achieve its objectives over a three-year period starting in April last year, but this has now been rescheduled over five years, ending in 2015-16, resulting in medium-term expenditure of a far lower R5.5-billion.
In his speech, Finance Minister, Pravin Gordhan said “the fund began operating in June last year and received over 2 500 applications in the first call for proposals — project allocations of over R1-billion have been committed”.
He neglected to mention that the treasury anticipates underspending of R1.8-billion for the past financial year. The rescheduling, as the treasury said, was “due to the intensive nature of the preliminary implementation activities, and the desired long-term impact of the Jobs Fund initiative”.
The original targets for the community work programme have also been lowered. The programme, initiated in 2009 and part of the expanded public works programme, gives participants 100 days of work a year at a rate of R60 a day. It also acts as a catalyst for community development in the most impoverished areas of South Africa.
In July last year, Cabinet approved a target of one million participants for the community work programme by 2013/14, which would effectively double the scale of public employment in South Africa. The target was then pushed back to 2014/15.
Cutbacks disappointment
Cutbacks announced in this week’s budget caused further disappointment. Over the next three years, R3.5-billion has been added to the programme’s baseline of R2.4-billion, enabling it to reach only 250 000 participants by 2014/15 — a quarter of the original target.
And even clarity on whether a youth wage subsidy will be implemented was not forthcoming in the budget, although Gordhan said concerns could be addressed in the design and implementation of the incentive and that greater urgency was needed to resolve the matter.
Gordhan indicated that an impressive 365 000 jobs were created last year and that unemployment had dropped, although it remained high at 24%.
But labour columnist Andrew Levy said the figures are skewed by the large amount of temporary jobs. The economy continues to shed jobs and more people drift into long-term unemployment each year.
The infrastructural push could well create jobs, but Levy said management of projects would need to become more effective. “Governments don’t create jobs, they create environments that can produce jobs. Unfortunately, poor management and corruption has undermined their efforts,” he said.
Job creation is a top priority for the state
Gordhan, in his speech, insisted that job creation is a central priority for government, noting that an additional R4.8-billion over the 2012 medium-term period is provided for the expanded public works programme, bringing its allocations to a total of R77.8-billion.
The Budget Review said expanded public works programme grants have been restructured and simplified so that provinces and municipalities are better positioned to create jobs.
From 2012/13, provinces and municipalities will be given greater certainty on the size of their allocations and more guidance on how to implement labour-intensive projects. The incentive to create jobs will be preserved by including past performance as a factor in calculating allocations for grants.
The focus in 2010/11 was on the implementation of phase two of the expanded public works programme, geared at halving unemployment by 2014 and creating a total of 643 116 work opportunities, with 203 690 full-time equivalents created.
Further job creation highlights, listed by Gordhan were:
- Working for Water and Working on Fire, which will receive an additional R1.1-billion (a total of R7.7-billion), providing for 135 000 jobs over the medium term;
- the National Rural Youth Service Corps receives an additional R200-million (a total of R900-million) over the next three years;
- and R300-million is added to the arts and culture sector for job creation.