Wednesday, September 9, 2015


Critically analyze the GDS progress in improving the socio-economic position of South Africa.
2. Commitment of the Business, Government and other constituencies to solve socio-economic challenges GROWTH DEVLOPMENT SUMMIT (GDS) 2003
(a)Public investment initiatives a struggle for government
(b)Expanded Public Works Programme (EPWP), distant from providing better jobs, decent work for all
4. Creation of Sector partnerships and strategies and enhancing Local procurement
(a)The over-arching need to improve the investment climate for physical and human capital in South Africa: Small enterprise promotion
(b)Co-operatives in South Africa: Their Role in Job Creation and Poverty Reduction(c)Jobs impact and monitoring
(a) Pension and provident funds
(b) Tension within the current housing policy in South Africa
(c) Financial Sector Summit
(a) Accelerating Equity through Black economic empowerment
(b) Strengthening the SETAs and Learner ships as a way to enhance employment equity:
(c) Education and training policies need to fill the Provision to infrastructure and access to basic services growing skills gap.
(a) Local level planning
(b) Local Economic Development
The former President of South Africa Thabo Mbeki in 2003 said Our response to the challenges of poverty and underdevelopment rests on three pillars: encouraging the growth and development of the First Economy, increasing its possibility to create jobs; implementing programmes to address the challenges of the second economy; and building a social security net to meet the objectives of poverty alleviation” Kirsten (2006).[1] The Growth and Development Summit (GDS) of 2003 was panacea for the commitment of business, government and industry to engage and analyze the economic trends of South Africa and establish the course to solve the socio-economic trends in South Africa Thabo Mbeki in 2003 said the intention to host a Growth and Development Summit (GDS) was for constituencies to work together to address the investment, employment and poverty challenges our country faces”[2]. Seventeen years into the new democratic dispensation, social policy and economic strategies that address the problems of socio- economic have not met the required or procrastinated expectations. This easy will critically analyze the GDS progress in improving the socio-economic position of South Africa by analyzing the economic trends in terms of employment, investment, trend in technology development, social services, education as well other variables that play a pivotal role in the reduction of socio-economic challenges facing South Africa
Commitment of the Business, Government and other constituencies to solve socio-economic challenges GROWTH DEVLOPMENT SUMMIT (GDS) 2003
With the government objective of halving unemployment the Growth and Development Summit was a major step to address the persistent presence of socio- economic challenges according to Altman (2008) the government objective was to halve unemployment rate between 2004 and 2014, from about 26% to 13% and the ultimate target of 6.5% by 2024[3]. Socio- economic challenges in South Africa according to Haydam have created some structural imbalances that have resulted in alarming and remorseless high rate of unemployment, crime, low investment confidence, increased in social welfare and HIV Aids[4]The major aim of the GDS was to engage all constituencies the government, business, labour and community to find ways to eradicate the continued presence of socio-economic challenges. According to Nedlac 2003 the GDS was to build an enduring partnership promoting a shared vision of South Africa's growth and development strategy to frame sector and developmental agreements and lay the basis for partnerships in action. Address urgent challenges by selecting from many possible interventions those which hold the promise of the greatest possible impact in the shortest possible time for accelerated investment, job creation, improved efficiency and productivity, greater social equity, and a fairer distribution of economic opportunities and rewards, while undertaking serious social dialogue on broad policy frameworks. Lending a hand by securing the commitment and active participation of all constituencies in those areas identified for prioritized action in ways that build on lessons learnt from development programmes”[5] .The GDS was concentrated on creation of more jobs, better jobs, decent work for all, addressing the investment challenge, advancing equity, developing skills, creating economic opportunities for all and extending services, and providing local action and implementation
Public investment initiatives a struggle for government: An expansion in public investment initiatives (PIIs) according to Nedlac 2003 was to develop and maintain economic and social infrastructure by government, state-owned enterprises and developmental institutions, in order to facilitate growth, improve productivity, create jobs and promote urban and rural development[6]. According Lewis to (2001) the Spatial Development Initiatives (SDIs) have concentrated on huge capital-intensive projects oriented towards exploitation and “beneficiation” of mineral resources, so the incentives for ordinary manufacturing enterprises have been limited, and the employment creation minimal.[7]This is illustrated by Fig two PII is in crisis. Lack of public investment initiatives since the democratic dispensation has become more pronounced in recent years, with the Gini coefficient (a standard measurement of income inequality) increasing from 0,56 in 1995 to 0,57 in 2010 (Statistics SA, 2010:48).[8] Unemployment still remains a major problem according Haydam (2002:199) the costs of unemployment is divided into two the economic and non economic costs, the economic cost is the lost of output of workers who are unproductive and the non economic cost results in the high level of crime and labour unrest.[9]
(b)Expanded Public Works Programme (EPWP), distant from providing better jobs, decent work for all The EPWP was launched in 2003 according to Altman and Hemson[10] the EPWP was a short to medium term response to high unemployment and marginalization aimed to provide work opportunities, training and launch trainees into labour market. The EPWPs have created a lot of opportunities in the South African labour Market according to the 2010 Budget review[11] the Expanded Public Works Programme created 1.6 million short-term jobs during its first phase from 2004 to 2009, exceeding its target of 1 million EPWP are above expected expectations illustrated by Fig Two. The EPWP was established in line with the government objective to halve unemployment by 2014, designed around service delivery projects that are needed, such as rural infrastructure, clearing of alien vegetation or community-based social services such as early childhood development or home community-based care as well as to intensify labour absorption in the delivery of these services and infrastructure.
Altman and Hemson (2007:7) elaborates that in 2006/2007 approximately 300 000 people were engaged in the EPWP opportunity, with South Africa with one of the highest rates of open employment in the world the EPWP reaches currently about 7% of those unemployed by the broad definition and about 4% by the official definition.[12] EPWPs face a lot of problems the lack of government funding to the programmes according to Barker (2008:196) such programmes usually involve the denial of resources to some other programmes, EPWP might conflict with the fiscal and monetary policy of the government and largely it’s a temporary role and South Africa’s structural unemployment problem cannot be addressed through such programmes.[13]
Creation of Sector partnerships and strategies and enhancing Local procurement
(a) The over-arching need to improve the investment climate for physical and human capital in South Africa: Small enterprise promotion
The SMME sector in South Africa appears relatively underdeveloped; SMMEs appear constrained by inadequate demand, limited access and high cost of capital, and relatively weak support and procurement programs from Government. The sector is not especially dynamic: most recent employment growth has occurred through creation of new SMME firms, while existing firms have been reducing labour use, suggesting only limited success in the growth and maturation of a viable and vibrant SMME industry segment as illustrated by Fig Two SMME promotion is on track. However according to Lewis (2002) SMMEs are relatively under-developed: emergence of a more vibrant, export-oriented SMME sector appears to have been crowded out by factors such as the sanctions-related closure of export markets to South Africa, a trade regime that promoted capital-intensity in domestic markets, and distortions and regulations in domestic factor markets that have hampered the emergence or expansion of informal and/or start-up firms and this has continued even after the presidential GDS[14].
(b)Co-operatives in South Africa: Their Role in Job Creation and Poverty Reduction: According to NCASA’s baseline study:‘ Faced with massive economic restructuring and unemployment or under employment, millions of South Africans are discovering the potential of the workers co-operative, a collective entrepreneur model (rather than that of an individual entrepreneur) that provides decent and sustainable employment and a democratic workplace.’[15]
According Phillip Kate (20:2003) the most common problem in co-ops is that they start with an oversupply of labour, relative to their productive base, and relative to the absorption capacity of the markets they are targeting. Lack of financial and management techniques are rampant challenges faced by Co-operatives according Kate (2003:21) if the management skills do not exist within the co-op, then ensuring the design and operationalisation of effective systems for procurement, production, record-keeping, invoicing, sales, distribution and all the other functions of management requires extensive technical assistance.
(c)Jobs impact and monitoring: According to Nedlac 2003 in the Growth and Developmental summit the constituencies recalled Section 189 of the Labour Relations Act (LRA) that specifically provides parties attempt to reach consensus on measures to avoid retrenchments, or minimize the number of persons retrenched[16]. However this has not been a reality capital has taken advantage of the flexible labour market the 2005 unemployment rate according to Barker (179:2008) was 26,7% which represented 4.5 million people of the 16.8 million total labour force persons in labour market.[17] 2010 the unemployment rate has increased at an alarming rate according to 2010 Budget Review (2010:36) the broad unemployment rate increased sharply from 26.7% to 31.1%[18] see Fig One. The Minister of Labour Membathisi Mdladlana in 2010 Budget Review (2010:34) said that “stemming the rising tide of retrenchments is critical for us all. What will also be critical will be high-quality and courageous leadership from government”[19]. Job impact and monitoring has not been that successful but it is on track as illustrated by Fig Two.
Pension and provident funds: According to Nedlac 2003 constituencies supported the need for capacity building of employee representatives on Boards of Trustees, in order to enhance decision-making with regard to the proposed extension of investment instruments[20]. As illustrated by Fig three this objective is in crisis as nothing much has been done to create pension and provident funds to stipulate investment initiatives to the local population.
Tension within the current housing policy in South Africa: According to Lalloo, 1999, p. 38 Current housing policy in South Africa is the outcome of a process of intense negotiation within the National Housing Forum_ from 1992 to 1994[21] The right to `have access to adequate housing, is first articulated in the ANC's Reconstruction and Development Programme (RDP) in 1994[22],_also enshrined in the 1996 Constitution (Republic of South Africa, 1996, p. 12) According to the Department of Housing 1994 Housing the White Paper of 1994 gives the concept of `adequate housing a through its vision of
`viable, socially and economically integrated communities, situated in areas allowing convenient access to economic opportunities as well as health, educational and social amenities, within which all South Africa's people will have access to _ A permanent residential structure and with secure tenure, ensuring privacy and providing adequate protection against the elements; and _ potable water, adequate sanitary facilities including waste disposal and domestic electricity supply.[23]
However this has not been the case even after the presidential Growth Development Summitt 2003 according to Davies (2010) in informal `squatter settlements, exploitative shack-lordism still persist[24]. Mthembi-Mahanyele, (1999) elucidates that the Housing Ministry has consistently chiselled away at the original monolith of the project-linked capital subsidy mechanism, and now prides `a comprehensive instrument providing a wide array of housing subsidies[25] this is illustrated by Fig Three as housing has been achieved to some extent. Huchzermeyer / Habitat International 25 (2001) the problem in the housing sector is the in inaccessibility of credit facilities for the poor to build decent housing[26]. According to Mthembi-Mahanyele (1999) government clearly states a commitment to `unlocking housing credit however, such innovations are designed to serve the formally and informally employed `moderate income earners, a leaving a credit gap among the poorest, the precariously employed and unemployed[27].
Financial Sector Summit
The South African financial system according to Huchzermeyer / Habitat International 25 (2001) is highly developed and well managed, even by first world standards, most financial institutions are privately-owned and run, South African regulatory authorities are comprehensive and widely respected, the national payments system is modern, the court system is conducive to timely and unbiased settlement of disputes, and foreign banks are permitted to enter and operate with relative ease.[28] The breadth of financial products and services is unparalleled in other emerging market economies, and there is depth as well: the stock market is the 13th largest in the world, and the bond market offers first-world size and liquidity.
Accelerating Equity through Black economic empowerment
A few black-owned firms have merged into sizeable players some large corporations are now black controlled and black business has grabbed the headlines and initiative in an unprecedented manner. In 1999 according to Carter (1999) Metlife, was the largest black empowerment investment in the financial services sector had an asset base of R11 billion, making it the 26th largest company in the country, the media, forestry and paper, pulp, food and beverages, and fishing sectors have all attracted large-scale black investments[29]. Following ‘an initial flurry of politically driven deals’, black business reportedly captured about 10% of shares on the Johannesburg Stock Exchange (JSE) between 1994 and 1997 (Jacobs, 2002).[30] However according to Segal (2000) the value of BEE ventures dropped sharply in 1999 to R3.4 billion involving 45 empowerment firms compared to R21 billion involving 110 firms in 1998.[31]
In 2001, according to Ernst and Young, some 101 BEE deals were valued at R25.1 billion, but 104 deals in 2002 were valued at only R12.4 billion (Sowetan, 9 April 2003).[32] With the number of black companies on the JSE dropping from 26 to 21, ‘real black ownership was becoming a mirage’ but BEE has achieved to create black economic ownership as illustrated by fig four (City Press, 11 May 2003)[33]. By far the most important point is that blacks have made extremely limited inroads into the ownership, control and senior management of the private corporate sector. According to according to Bhorat (2004:958) the unemployment rate among black Africans tertiary qualifications went up from 10% in 1995 to 26% in 2002, the BEE (Black Economic Empowerment) as a government policy has not been able to address the inequalities in the contemporary labour market.[34] According to Terrablanch (2002:381) the supply in the African labour will increase to 76% of the total in 2020, the large numbers of Africans that will enter the market during the next 20 years will undoubtedly contribute to African unemployment until 2020[35].
Strengthening the SETAs and Learnerships as a way to enhance employment equity:
According to Patterson (2008) SETAs were established in March 2000 and are responsible for the disbursement of training levies payable by all employers in the country SETAs replace and extend the work of the previous industry training boards and are accredited by the South African qualifications Authority[36]. Skills Development Act (1998) provides a framework for the development of skills in the workplace. According Patterson (2008) the public investment initiatives, expanded public works programmes, co-operatives and small enterprises were targeted for developing potential learnerships, in relevant SETAs but not enough has been done as it still falls out of expected expectations as illustrated by fig four. However according to Nedlac(2003) new skills development learnerships framework provided a useful vehicle for addressing employment and skills shortage problems and simultaneously developing much needed skills in our country SETA and Learnerships provided much needed skill across all sectors.
Education and training policies need to fill the growing skills gap.
The lack of employability contributed to lack of education and skills in the South African labour market can be a cause of the alarming rates of unemployment according to McKenzie & Wurzburg’s (1997) employability is the capacity to be productive and to hold rewarding jobs during a working life, and to be equipped with up-to-date skills and competences[37]. According to Altman and Hemson (2007:9) unemployment is serious among the youth more forcefully: about 37% of those aged 15 - 34 were unemployment by the strict definition in 2005 (Labour Force Survey, September 2005)[38].From 1995 the high rate of unemployment has increased according to the 2010 Budget Review (2010:36) employment fell by 870 000 during 2009, raising the jobless rate to 24.3% – the highest level in last five years.[39] However education has been the major objective of the government, it is on track as illustrated by fig four.
Provision to infrastructure and access to basic services According to Development Update, 2003, Vol. 4 No. 1 provision to infrastructure and access to basic services still is a common problem, the starkest manifestation of this is that many thousands of households take care of family members in the terminal stages of AIDS – where chronic diarrhoea, vomiting and loss of bladder control is common – without access to toilets or safe running water[40]. Electricity and water cut-offs have forced many people (mostly women) to revert to fetching wood and water, often from unsafe sources, and to rely on illegal reconnections according to Desai, 2002 in these circumstances, where illegal connections to services are made, debt summonses and eviction notices would have been served, while the state is demonstrating increasingly repressive responses to protests and marches against the impact of its neo-liberal policies, some observers now speak of the ‘criminalisation of the poor’.[41] However the government has made remarkable trends in providing infrastructure and basic services as illustrated by fig five
Local level planning: According to Nedlac 2003 patterns of development in South Africa resulted in black communities, particularly women, workers, youth, people with disabilities and rural people being largely excluded from the benefits of the mainstream of the economy through a general lack of opportunity, limited ownership opportunities, and discrimination in the workplace and through the consequences of apartheid geography and spatial development, which has left a legacy of inequality[42]. Local level planning has been achieved to a considerable extent and its ahead schedule refer Fig Five, an example that can be derived from the Gijima KZN Programme according to Pattersom (2008;21) which is a six-year programme designed to support the provincial Department of Economic Development (DED) of KwaZulu Natal and a broad range of stakeholders to more effectively implement LED to achieve equitable economic growth in the province the programme has managed harness creativity at a local level through a demand-led approach with the centrality of a partnership approach[43]. The programme objectives were to promote pro-poor local economic development, build the capacity of local government in managing LED and increase local competitiveness through the building of partnerships
Local Economic Development The concept of Local Economic Development (LED) is currently attracting considerable attention in government and policy circles in South Africa (Nel and Humphrys, 1999, p. 77)[44].According to Zaaijer and Sara (1993, p. 129), LED is essentially a process in which local governments and/or community based groups manage their existing resources and enter into partnership arrangements with the private sector, or with each-other, to create new jobs and stimulate economic activity in an economic area[45]. Local Economic development by the South African government has been providing financial support, land and building development and information and marketing assistance and training, LED is on track illustration Fig Five. LED finds accord with the post-apartheid government’s pursuit of a neo-liberal economic strategy and a commitment to devolve powers of government to the local level and to support community-based endeavours (ANC,1994; RSA, 1996a, 1996b)[46]. However although they has been remarkable success in the LED as Rogerson (1997, p. 190) notes although the critical importance of developing LED strategies to assist post-apartheid reconstruction is stressed in several government documents a coherent set of guidelines and a framework for LED has yet to emerge[47].
In commenting on the recent Growth and Development Summit, Sampie Terreblanche stated that, ‘the summit failed to establish the root causes of unemployment and that the government attended the indaba without wishing to debate its GEAR macro-economic policy, the free market and globalisation, and restrictive labour policies[48]” (Independent on Sunday, 15 June, 2003) (own emphasis). The GDS was done in a neoliberal policy framework according to Terrablanch[49] although objectives of GEAR were to reduce socio-economic challenges it resulted in the destruction of 1.3 million jobs opportunities which supposed to have been created by the policy by 2001 and more than 1 million jobs were destroyed in the modern sector. Mathekga[50] elucidates the same sentiments that instead of GEAR creating jobs and alleviating poverty the government policy resulted in retrenchments, downsizing and restructuring. The Growth and Development Summit of 2003 has not yet fulfill its objectives and visions as most of it proposed targets and expectations have not yet occurred.
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[1] Kistern (2006:2) When President Mbeki introduced the “two economies” terminology in 2004 the second economy was described as the space within which those who are marginalised from the first economy operates.
[2] Nedlac (1: 2003) Mbeki sentiments on the need to host the GDS
[3] Altman (2008:11) the objective of the government to halve unemployment by 2014 to 2020
[4] Haydam (2002:146) The effects of socio-economic challenges on the South African economy and the population.
[5] Nedlac (1;2003) the objectives of the GDS in mapping a way forward to eradicate socio-economic challenges.
[6] Ibd
[7] Lewis (2001) Public Investment initiatives have been concerntrated on huge capital intensive sectors marginalizing the local population
[8] Statistics SA (2010:48) Despite the resolutions made in the GDS inequality persist and more socio-economic challenges
[9] Haydam (2002:1999) Unemployment is the root cause for slow economic growth and civil unrest.
[10] Altman and Hemson (2007:5) The bases for the creation of EPWP to create employment.
[11] 2010 Budget Review (2010:39) The EPWP has been important in creation of employment but the question was the employment decent , sustainable and secure.2`1
[12] Altaman and Hemson (2007:7) the advantages of EPWP in eradicating unemployment
[13] Baker (2008:196) Lack of government funding in EPWP due to sustainability in the long term.
[14] Lewis (2002) SMME still face a major challenge of under-development and competition because of the neo-liberal policies
[15] Hope in Action: Co-operatives in South Africa’; A report on the NCASA 2001 Baseline Study, produced by NCASA, in association with the Canadian Co-operative Association, March 2002,; their emphasis.
[16] Nedlac 2003 The major reason for the jobs impact and monitoring in South Africa
[17] Barker (2008:179) The rate of unemployment in increasing and policies are not eradicating the effects of unemployment even the GDS
[18] 2010 Budget Review (2010:36) Increase in unemployment trends can be a reflection to the failure of GDS
[19] 2010 Budget Review (2010:34) Minister of labour sentiments on the stemming raise of retrenchments in the SA labour Market
[20] Nedlac 2003 pension funds and provident funds are crucial to investment
[21] Funded by the Independent Development Trust (IDT) which operated on a government grant, the National Housing Forum was set up in 1992 with the intention of negotiating the future housing policy and framework. Represented were business, development agencies, organised labour and community, and political parties (see Lalloo, 1999, p. 38).
[22] Tripartite Alliance (1994). Every South African citizen has the right to decent housing
[23] Department of Housing, 1994, p. 12 The concept of adequate housing that is suitable for SA citizens
[24] Davies 2010 The mushrooming of illegal settlements is a true reflection of the failure of government to provide decent housing
[25] Mthembi-Mahanyele, 1999, p. 10 The ministry of Housing commitment in providing decent housing.
[26] Huchzermeyer / Habitat International 25 (2001) The problem in the housing sector is lack of accessibility to credit facilities
[27] Mthembi-Mahanyele (1999) The government has the commitment to open credit facilities to housing, however caters to those with income while they is marginalisation of the poor.
[28] Huchzermeyer / Habitat International 25 (2001) The South African Financial Sector is stable and meets world standards
[29] Cater (1999) BEE results in distribution of wealth to the blacks
[30] Jacobs (2002) Black owned business started showing at JSE
[31] Segal, (2000) Sharp decline in BEE ventures due to mismanagement and lack of expertise to sustain firm operations
[32] Sowetan, 9 April 2003). Decline in BEE deals and further decrease
[33] City Press, 11 May 2003 Further decline in black owned businesses dropping in numbers at the JSE
[34] Bhorat (2004:958) The rate of unemployment is increasing in the black population
[35] Terrablanch (2002:381) The ever increasing African labour will result unemployment in 2020
[36] Patterson (2008) The aim SETAs as a government initiative to enhance employment equity that was lacking on the post apartheid era
[37] McKenzie & Wurzburg’s (1997) The definition of employability which is lacking currently on the SA labour market
[38] Altman and Hemson (2007:9) unemployment is serious among the youths as the labour absorption rate is decreasing for new entrants.
[39] 2010 Budget Review (2010:36) unemployment is still a major problem each year the percentage in increasing.
[40] Developmental Update (2003) The problem of access to basic services is still rampant with some people living in households without basic amenities
[41] Desai, 2002, SA citizens have resorted to illegal connections because of the unaffordability of basic serves
[42] Nedlac 2003 LED is on track the South African government is promoting equity and economically emancipate the historically marginalized groups
[43] Pattersom (2008;21) The Gijima KZN programmes demonstrates the government commitment to local level planning
[44] Nel and Humphrys, 1999, p. 77) LED has been incorporated into government policies and strategies bring benefits to SA citizens
[45] Zaaijer and Sara (1993, p. 129) The definition of LED and its benefits to the SA economy to stimulate growth and eradicate socio- economic challenges
[46] ANC,1994; RSA, 1996a, 1996b LED is linked to the government pursuit of neo-liberal policies and paramount in decentralising powers of the government to the local level
[47] Rogerson (1997, p. 190) Policy implementation on LED has been lacking even still after the GDS 2003
[48] Independent on Sunday, 15 June, 2003 GDS left out the discussion of the effects of the neo-liberal policy GEAR of unemployment
[49] Terrablanch (2002:424) The negative impact of the neo-liberal policy GEAR to the labour market and shedding of jobs as technological transfer and global competition spearhead by the policy creates spheres of unemployment.
[50] Mathekga (2009:3) The negative result of GEAR policy was in the alienation of Labour as an important variable in economic growth