President Jacob Zuma and the presidential joint working group on Thursday reported back on the status of the framework response to the economic crisis, and noted that R11-billion has been set aside into activities designed to address the impact of the recession.

Despite the initiatives under the framework, aimed at saving jobs, nearly one-million people have lost their jobs as a result of the economic crisis.

Zuma said that the South African economy, which emerged from an economic recession, might shed more jobs before it turns the corner.

The economy grew by 0,9% in the third quarter, after it entered its first recession in nearly two decades in the final quarter of 2008.

“We cannot yet say that the implementation of the framework agreement is complete,” reiterated Zuma.

Government had set a side R2,9-billion for a “training lay-off” scheme; R6,1-billion for loans through the Industrial Development Corporation (IDC) to sectors in distress; and R2-billion, which the Unemployment Insurance Fund allocated to the IDC to be loaned to firms in distress.

The training lay-off scheme, which aimed at providing companies with an alternative to retrenching workers, was announced in August, with R2,9-billion available for its implementation. Facilitating the training lay-off applications were 200 commissioners who were briefed on the training layoff, and 40 experienced commissioners were trained across South Africa.

The Council for Conciliation Mediation and Arbitration (CCMA) has incorporated training lay-offs into a holistic approach preventing job losses. “Through these pro-active interventions at the CCMA, 4 482 jobs have been saved from March to September,” said Zuma.

Further, a retrenchment action plan launched by the manufacturing, engineering and related services sector education and training authority has about 7 000 workers in a programme based on the training lay-off model.

The R6,1-billion has been set aside by the IDC as special loans to firms in distress. The IDC’s approvals to distressed firms thus far was estimated to have saved some 7 700 jobs. “The pipeline of projects currently has 33 applications, with a potential value of around R2,05-billion,” said Zuma.

He added that commercial banks and development finance institutions were working on an agreement that would allow them to assist firms in distress by sharing risks and relevant information.

Under the framework response, sector packages have also been developed through the National Economic Development and Labour Council (Nedlac) for industries in distress. These include: the automobile sector; clothing and textiles; capital equipment; transport equipment; and the metal fabrication sector.

Interventions included trade remedies, skills funding for employees, industrial support and improved access to finance for capital support.

Strict conditions for businesses using State funding were developed by the task team to prevent abuse, and these include: restraint in relation to executive pay; restrictions on retrenchment; commitment to local procurement; and social dialogue between labour and business at the workplace.

Government has also committed to a 30-day payment period for small businesses, and launched a hotline on September 21, to address complaints about slow government payments to small businesses. “Nearly 3,7-million has been conveyed to small business as a result of the hotline,” said Zuma.

CLOTHING AND TEXTILES

Zuma reported that the South African Revenue Service has seized 750 tons of clothing and textile products that were smuggled into the country, from raids on 88 premises conducted in a nationwide enforcement initiative.

“The effect of this heightened action against illegality is expected to offer support to local producers, and an estimated 1 400 jobs have been saved as a result of these actions,” highlighted Zuma.

It came as the government has set up a special team, focusing initially on the clothing and textiles sectors, to crack down on customs fraud and illegal imports.

Also in this sector, an application to the International Trade Administration Commission (Itac) by the clothing and textile sector to increase 35 tariffs to their bound rate of 45% was approved and finalised.

Itac has also approved a decrease in tariffs through a rebate scheme for several textile items, to encourage local clothing manufacturing.

“Additional applications have been made to Itac in capital equipment, transport and metal products, in order to effectively use legal trade measures to address the short term crisis in vulnerable sectors,” added Zuma.

Representing labour on the working group, Cosatu general secretary Zwelinzima Vavi said that from a union point of view, they wished that more jobs could have been saved, but said that the framework was on the right track, and was “doing well overall”.

On behalf of the business community, Business Unity South Africa CEO Raymond Parsons said that getting all the different constituencies – government, business, labour, and community – working together on the intervention response, deserved praise.

“This is the way to go for South Africa,” he confirmed, adding that of all intervention interventions, South Africa stood out in the way that it mobilised social partners to be involved in the framework.

Both business and labour said that they supported the current macro-economic framework.

Government has maintained a strong counter-cyclical fiscal and monetary policy stance, and government-spending levels have been maintained in spite of a sharp drop in tax revenues. The country is spending R787-billion on infrastructure.