Date: 26/11/2004
Source: Ministry of Public Works
Title: Sigcau: Corporate Social Investment breakfast


Speech by Minister of Public Works, Ms SN Sigcau MP, during the Corporate Social Investment breakfast with the Captains of Industry held at Country Club, Auckland Park, Johannesburg

I would like to thank all of you for coming this morning, and judging by the numbers in which you have responded, I have no doubt that we are onto a winning wicket.

The reason I have asked you all to gather here is to talk openly about some of the socio economic challenges which as you know face this country.

I will also talk about the Expanded Public Works as one of the tools we are using as government to deal with poverty and unemployment.

I also plan to look at the ways in which I believe the corporate sector can facilitate the goals of eradicating poverty and unemployment in conjunction with ourselves.

Statistics South Africa’s Labour Force Survey indicated an unemployment rate in March 2004 of 27.8% as compared to 28.4% in September 2003 with 11 984 000 employed as compared to 11 652 000. This means 4 million people were unemployed in South Africa in September last year. While there has been growth in employment figures between 1995 to-date, we all agree that the rate has not been sufficient to meet the growth in demand for jobs.

In order to halve unemployment by 2014, we would need to create 546 000 jobs per year. In other words, 276 000 more jobs than we are currently doing as a country.

There are two ways in which one can attempt to deal with this challenge.

* You can either rely on economic growth which creates enough jobs in the economy to absorb all the job seekers.

* At the same time you could improve the education system to ensure that as the jobs are created, there are skilled people to take them.

One of our problems is that while our economy is growing, we do not have the right people to take up the positions. So we have the phenomenon of jobless growth which is to a large extent the mismatch between jobs and skill.

So what is my Department doing in this regard?

As short to medium term solution, we have launched the Expanded Public Works Programme which involves reorienting line function budgets and conditional grants so that government expenditure results in more work opportunities, particularly for unskilled labour.

The infrastructure sector in the EPWP involve the ring-fencing a portion of the existing conditional infrastructure grants to provinces and municipalities. Over the next 5 years, approximately R15 will be spent on the labour-intensive construction and maintenance. We estimate that the local labour content of civil engineering projects will increase on average from 5% of project costs to 30%. These project costs are competitive with machine-intensive construction methods and quality.

We will over five years build 37 000 km of roads, 31 000 km of pipelines, 1 500 km of storm water drains and 150 km of urban sidewalks using labour-intensive methods. The infrastructure sector will in this way create 750 000 employment opportunities.

Important to note is that the workers will receive training, with contractors being placed in Construction Education and Training Authority accredited learnerships, a combination of class and practice. We are glad to note that ABSA has agreed to extend credit to those learner contractors.

As a further example, some of the programmes under the Department of Environmental Affairs and Tourism are the following:

* Sustainable Land Based Livelihoods;
* People and Parks;
* Working for Tourism; and
* Working on Waste
* Working for the Coast

The sector aims at job creation, community participation, the utilisation of indigenous knowledge and sustainable natural resource management. The sector will establish an urban greening and housing programme focusing on the youth.

The Social Sector, as a third example, is focusing on the expansion of Home/Community Based Care (HCBC) programmes and on Early Childhood Development (ECD).

Both areas are highly labour-intensive and provide work opportunities, given the large needs for these services. The reality of HIV and Aids means we will need more not less of these Home Based Care sites.

Looked at in this manner, the epidemic presents both cost and opportunity. From the depth of desperation, a phoenix will rise in the form of jobs. At least 150 000 work opportunities will result from this activity over the next five years.

The social sector plan consists of learnerships after which learners will receive formal qualification in Home Based Care or Early Childhood Development (ECD) thus enabling them to enter into formal employment in these sectors. In the ECD sector it is important that the large numbers of ECD sites are registered in order to receive formal government support for the workers in learnerships.

The EPWP is a transversal programme of government, drawing all available expertise to ensure victory against poverty and unemployment. We are pleased to report that although the EPWP was launched in May, it has been going since April. We have in the period April to June created at least 38 000 opportunities and signs are that we are moving towards the 80000 mark. In order to allay doubts about the effectiveness of the EPWP we have put in place stringent monitoring and evaluation mechanisms to gauge progress in a scientific manner.

In this regard:

* We have developed a monitoring framework for the EPWP with the assistance of the Human Sciences Research Council
* The HSRC has designed an evaluation system for the EPWP
* The existing National Treasury monitoring system will be used to monitor EPWP projects funded through the Provincial Infrastructure Grant (PIG)
* We have established a new monitoring system for the Municipal Infrastructure Grant
* The indicators will be included in the Labour Force Survey and General Household Survey of Statistics South Africa
* A tender will be issued for further evaluation by an independent agency.

We have noted that additional employment creation depends on the degree of labour-intensity of the production methods used. For example, the average increase in employment creation in Gauteng’s labour-intensive programme is 10%, whereas the average increase in employment creation on the Gundo Lashu roads programme in Limpopo is 600%.

The Business Trust (BT) has agreed to support the EPWP and to establish a Facilitation Fund to fund activities around the implementation of the EPWP to tune of R15 million in the first year.

Since the World Summit on Sustainable Development in 2002 and the King II Report in the same year, the quest by South African companies for sustainable development has picked up pace.

In the developed world, socio economic interventions are funded from the fiscus which all of us contribute to and are therefore the responsibility of the state. In our case I think there is no longer a debate about this issue. We are agreed that both the public and private sectors have the responsibility to contribute to a sustainable environment. The question is perhaps what is the most efficient and effective way is to do this.

First world economic growth without whole-sale transformation of society cannot be the way to go. Jobless growth is not in the long term interest of both the private and public sectors.

We also believe that apart from money in the hands of the private sector, there is general acceptance that this sector holds the skills which government does not have which are necessary to drive this country forward.

Corporate social responsibility or citizenship understands that business cannot be sustainable until the majority of our people move out of the margins of the economy and into the centre.

In this century, it is no longer business as usual, but an increasing number of corporates are asking themselves how best they can meet the so-called triple bottom line of the three Ps which are profits, people and planet.

The Expanded Public Works Programme (EPWP) is one of the instruments government uses to fight against poverty and unemployment. We have a challenge to halve unemployment by 2014, and the EPWP provides just one way in which we can achieve that goal.

This government has signed a social compact with the people, in a similar way that American President Franklin D Roosevelt committed his government to a New Deal by uttering the following words. “I pledge you, I pledge myself to a New Deal with the American people”. This government has pledged to create jobs and to build a staircase between the First and Second Economies.

The philosophical basis for the EPWP is to restore human dignity to the majority not by putting bread on their table, but by giving them the means to fish for themselves.

The EPWP is based on the use of labour intensive methods wherever humanly possible to get millions into work by giving them a learnership based on class and practical training. We have no doubt that in the process we shall increase the national skills base markedly over the next five years and create overall employment in the long term.

While we are able to find short term solutions, separately, we can only find permanent solutions to our common challenges, together. The growth of public private partnerships is just one testimony to the acceptance of this fact of life.

We think we share a common approach with the business community with regard to funding for the EPWP. We have for instance not sought any additional funding for the EPWP but are ring fencing portions of our national, municipal and provincial budgets to the tune of R15 billion over five years, which means no additional fiscal and financial implications.

This is an aspect we believe business will like, because corporate social investment in the main operates along similar principles. Funding corporate social responsibility from the balance sheet means it adds to rather than subtracts from the bottom line. This means corporate social responsibility has truly become an integral part of the triple bottom line.

So, the corporate social investment expenditure is already there, the question is what are ways in which this can contribute more and in a sustainable manner to the fight against poverty and unemployment? How can corporate social responsibility contribute to the EPWP?

Here are some of the areas in which the corporate sector could play a role

* One of the questions we face is with regard to the exit strategy side. Once all these people have been trained, we need to find work for them. It will be of no use training many people who end up swelling the ranks of the unemployed
* We could ask the question differently. What are the needs of the private sector and how do we collaborate to develop this skill
* Corporates could sponsor EPWP training sites

In the Social Development Sector here are some of the opportunities for collaboration:

* There is no funding stream from government at the moment but an application for a national conditional grant for the Early Childhood Development has been submitted to the National Treasury
* The private sector could adopt community based sites such as Early Childhood Development or Home Based Care addressing gaps that we identify
* Economic empowerment of women, especially in rural areas, through managing ECD Sites as small businesses
* Providing resources for the Early Childhood sites with infrastructure, teaching materials, medical supplies and funding
* Business can also develop capacity in the following areas

Funding proposals

o Information management
o Managing projects towards sustainability/ Project management/ Financial Management
o Entrepreneurial skills and Strategic Planning

In conclusion, I would like on behalf of government thank members of the Corporate Social Investment community for the genuine interest they continue to show in the development of this country.

Seen from the point of view of one organization, the challenges outlined above might look enormous. Seen from the side of government alone, the responsibility to halve unemployment by 2014 may seem daunting. Yet when we view this together, the burden becomes lighter to all of us.

I would like on behalf of government to take this opportunity to thank corporate South Africa for playing your part in ensuring that this country develops not on one side, but in all relevant aspects through your Corporate Social Investment.

Research conducted by Trialogue suggests that out of the R2.35 billion in Corporate Social Investment (CSI) in 2003, at least 16 % went to HIV and AIDS. The 2003 CSI spend is 6.8% higher than the previous year showing a steady growth over the last three years. This indicates a willingness on the part of the corporate sector to contribute meaningfully towards a sustainable South Africa. Notably, the research says there was a decrease in the CSI on job-creation between 2000 and 2003. While there has been an increase in spending on health owing to the HIV and Aids epidemic, job creation remains the second most funded sector in CSI after education.

Trialogue says further that the job-creation budget for 2003 was R278 million or 12 % of the total CSI budget with an expected rise in the short to medium term.

We do not doubt that between ourselves, there are many more opportunities we could explore in the EPWP and in other projects.

Thank you.

Issued by: Ministry of Public Works
26 November 2004