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Jul 10, 2012

Infrastructure, labour hurdles holding back SA growth

Construction|Johannesburg|Africa|Africa|South Africa|Manufacturing|Manufacturing Sector|Real Gross Domestic Product|Andrew Levy|Andrew Levy Labour|Hylton Macdonald|Infrastructure|Ronel Oberholzer
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If the South African government kept to infrastructure spending targets and labour unions limited wage increases to 1% above inflation, the country's real gross domestic product (GDP) could grow by a minimum of R22-billion a year, IHS Global Insight sub-Saharan Africa principal economist Ronel Oberholzer said on Tuesday.

She stated at the IHS Africa Economic Outlook Conference, in Johannesburg, that this could also create a minimum of 300 000 jobs in the country.

Oberholzer emphasised that good economic leadership would be required to overcome challenges and elevate economic growth. At the conference, South Africa's labour and infrastructure hurdles were highlighted as key aspects to be addressed to allow for notable economic development.

Although South Africa showed relatively good growth over the past two years, compared with developed countries, it was not on par with its emerging peers.

The country also showed uneven and hesitant growth following the global recession. Oberholzer pointed out that growth was not driven by the construction and manufacturing sector, but by increased consumption expenditure, as the government pushed up its employment numbers. However, consumption expenditure was expected to decline, as the current government employment levels would not continue in the long term.

Oberholzer stated that unemployment would, therefore, be a concern going forward, amplified by the forecast that the private sector would continue its trend of low employment numbers and would not come to the rescue.

Aveng group risk manager Hylton Macdonald said the local infrastructure sector was at a tipping point, overshadowed by underspending and job losses.

"Government cannot overcome this alone, the private sector will have to contribute in terms of job creation, skills development and enterprise development," he suggested.

Meanwhile, Andrew Levy Labour Relations Advisors owner Andrew Levy agreed that unemployment posed a real threat to South Africa's economic growth. "The black youth are the worst affected and this is government's worst failure," he stated.

Levy proposed that unemployment could be tackled if centralised bargaining was scrapped, labour legislation was overhauled, especially in terms of strikes and dismissals, and if job subsidies for the labour market were implemented. If these collective targets were met, South Africa could be ready for a real economic takeoff.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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