The economic crisis is posing a serious challenge to government's plan to create 500 000 jobs by December, Public Works Minister Geoff Doidge said on Tuesday.

"If you look at 500 000 jobs by December - it is possible, but we will have to work hard," Doidge told Parliament's Portfolio Committee on Public Works.

"We are in a serious recession and jobs are being shed."

Doidge said there was an ongoing intervention on the part of the government to create jobs.

But he said at the moment, "the need is greater than what we can provide opportunities for".

A report on the government's expanded public works programme (EPWP) presented to the Committee on Tuesday said the impact of the global economic crisis, combined with electricity rationing and rising interest rates, had reduced the rate of employment growth.

Around one-quarter of the labour force was unemployed, while 40% of the population lived below the poverty line, according to the report.

The formal economy needed to generate an average of 500 000 new jobs a year and four-million jobs by the end of 2014 to halve unemployment.

According to the report, just 83 900 "work opportunities" were created between April and June.

The report said however, that the figure was "very conservative".

Some R45-billion has been budgeted for EPWP infrastructure projects during the first five years of the project.

Public bodies from all spheres of government were required to
"optimise the creation of labour intensive work opportunities" for the unemployed through the delivery of public and community services to ensure the December target was reached.

Doidge said earlier this year that phase one of the EPWP had created 1,4-million jobs.

The second phase, launched on April 4, would provide fiscal incentives to support infrastructure projects funded by provinces and municipalities to create additional work opportunities.

The infrastructure sector of the programme was expected to contribute more jobs - in excess of 2,3-million, followed by the environment and culture sector at 1,1-million and the social and the nongovernment sectors together yielding more than 1,3-million jobs.