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SA must ensure recession does not destroy productive capacity – Patel

13th August 2009

By: Chanel de Bruyn
Creamer Media Online Managing Editor

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Government and business were in agreement that the country had to ensure that its productive capacity was not destroyed by the recession, Economic Development Minister Ebrahim Patel said on Thursday.

Following a meeting with Business Unity South Africa (Busa), Patel told journalists the means through which the country would achieve this required more reflection.

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He noted that Busa and government shared a number of common views regarding the recession and the way forward.

Both parties were in agreement that there was a need for urgency in South Africa's response to the recession and that bold measures were needed.

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The government recently released details of the framework agreement to deal with the recession. Some measures include the creation of a R2,4-billion jobs fund to assist workers and employers affected by the recession. A training lay-off scheme would be launched next month.

Support for distressed sectors, including support for companies in the automotive sector and a rescue package for the clothing and textiles industry will also be unveiled. Development finance institution the Industrial Development Corporation has set aside R6-billion over the next two years to respond directly to the economic crisis.

President Jacob Zuma said at the time that significant technical work had been done, but that the implementation of the framework had to be accelerated.

South Africa slipped into its first recession in 17 years this year, with the economic downturn severely impacting on a number of sectors, particularly manufacturing and mining, where thousands of jobs were lost.

The National Association of Automobile Manufacturers of South Africa reported this week that employment in the automotive industry was at a level last witnessed 22 years ago. The sector cut 4 496 jobs in the first six months of the year.

Further, Patel said that government had offered business the opportunity to help shape economic responses beyond the recession.

He noted that it was important to also look beyond the recession so that it could prepare for the future.

On Wednesday, Patel met with national and provincial economic minister, MECs and senior government officials to reflect on the impact of the recession on the economy.

Newswire Sapa reported that the meeting had agreed that there had to be greater awareness nationally that the economic crisis could continue for a long while.

"Even if economic growth takes off again, we can expect employment recovery to lag for some time," Patel was quoted as saying at the meeting.

The MINMEC forum would on an ongoing basis share project ideas, consider new or existing policy initiatives, and consolidate strong partnerships between national, provincial and local governments to deal effectively with the challenges facing economic development.

 

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