Job creation, as well as delivering on the New Growth Path’s aspiration to create five-million jobs over the next ten years, remained the primary focus of government for 2011, President Jacob Zuma said on Tuesday, stressing that government would work with other sectors, especially business, to achieve a lowering of the unemployment rate.

Addressing lawmakers on the occasion of The Presidency’s Budget vote, Zuma said the government sector had created 133 000 new jobs in the past financial year, which compensated for the still weak performance of the private sector.

But government was also looking to competition policy and to foreign direct investment to raise employment levels.

South Africa’s unemployment rate had risen above 25% again after more than one-million jobs were lost during the recession associated with the recent global financial crisis.

“The strategic approach to competition policy is ensuring lower prices especially for intermediate goods and wage goods, including fertiliser and food,” he added.

Efficient Group economist Freddie Mitchell said that increased competition would be good for local markets, but said that barriers to entry remained “huge”.

“South Africa has about four major cell phone contractors, four major banking institutions, with Capitec now moving forward in the banking sector, and a few big retailers. There are many big players in a small market,” he said.

However, Mike Schussler from Economists.co.za, said competition policy was but “one small step” in closing the gap of the unemployed in the South Africa. “While we need to consider all avenues to create jobs, I believe the best way is through infrastructure expenditure and I don’t think that competition policy is going to make a big difference as much as infrastructure could,” he told Engineering News Online.

There was also an “urgent need to get rid of the red tape” in South Africa as it placed constraints on small businesses wanting to enter the market.

On foreign direct investment, Zuma said government would seek to facilitate an increase in investment, but would also do what was necessary to protect local jobs and industries. “We believe it is possible to do both,” Zuma avered.

He highlighted the fact that R20-billion had been made available in tax allowances or tax breaks to promote investments, expansions and upgrades in the manufacturing sector. To date some R4.1-billion had been invested in three projects in the Eastern Cape, Free State and Gauteng, with the total investment allowance or incentive of R1.3-billion made available. The projects would create some 364 jobs.

Cabinet Clusters were also to provide reports next month on the impact of their work in creating the right environment for job creation.