Oct 18, 2012
Salary increase freeze to cost SA R5bn in lost tax revenueBack
Agriculture|Africa|Econometrix|Mining|System|transport|Africa|Europe|South Africa|United States|Manufacturing|Product|Services|Azar Jammine|Infrastructure|Jacob Zuma
© Reuse this
Jammine, who was speaking at a Decision Process International business breakfast, was commenting on President Jacob Zuma’s call for salary increase freezes in both the public and private sectors.
Zuma stated that CEOs and executive directors in the private sector and senior executives in the public sector should freeze salary increases and bonuses over the next 12 months, as a signal of a commitment to build an equitable economy.
Meanwhile, Jammine said that the lack of progress in educating the South African workforce, compared with the rest of Africa, was stunting economic development.
He also noted that the rest of Africa’s governments had increasingly improved governance of their countries, as well as macroeconomic improvements and stability, while South Africa seemed to be going in the opposite direction.
“We are lacking leadership and we need governmental intervention in the interest of reducing inequality,” Jammine said.
South Africa had the potential to exploit the opportunities for growth in the rest of the continent; however, the country’s strong links with advanced countries in Europe and the US would act as a drag on overall economic growth over the next five years.
“The structure of the South African economy (with significant exports and very little manufacturing) is one that is moving in a very unfortunate direction in terms of employment. Mining and agriculture have consistently lagged behind the national economic growth rate, and unfortunately those are the very sectors that can employ, gainfully, people without skills,” Jammine added.
Further, skilled sectors such as telecommunications, transport, financial services, retail and tourism were now taking the forefront in the economy. “We have an abundance of unskilled workers, but a declining unskilled sector to employ them into, which is problematic, as inequality is increasing” he said.
Jammine further said the solution to mitigate these problems had already been drafted in the form of the National Development Plan, which has now been officially endorsed by Cabinet.
“The plan is to spend about R845-billion over the next three years on infrastructure development, with the bulk, about 35% in electricity. Further, it aims to raise exports, increase the size and effectiveness of the innovation system, improve the functioning of the labour market and support small business.
“However, because Cosatu doesn’t support it, and the Presidential election is coming up, which means that certain parties would not want to upset its tripartite alliance, the plan is kept hush-hush,” he said.
Jammine concluded that the South African economy was growing, but at a very slow rate. “Two per cent gross domestic product growth a year is boring, but it has been one of the most stable growth rates in the world over the last 20 to 30 years. If you keep growing 2% to 4% each year, the size of the economy is expanding and you would need more infrastructure as it grows,” he said.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Researcher and Deputy Editor Online
Other Economy News
Updated 33 minutes ago Imperial Holdings has entered into exclusive negotiations with Hollard Insurance and an unnamed associated party over the possible acquisition of Imperial’s interest in the Regent Insurance and Regent Life Assurance businesses, which hold long- and short-term...
Updated 2 hours 6 minutes ago Suggesting market-share gains by the retail group, Massmart CEO Guy Hayward reported on Wednesday that the company had managed to grow its sales by 9.5% in the first 20 weeks of this year, despite “intense” competition in the retail sector. Comparable sales grew 7.4%...
Article contains comments
Updated 3 hours ago State-owned enterprises (SOEs) have the potential to stimulate “reindustrialisation and radical economic transformation”, Deputy President Cyril Ramaphosa said during the Presidency’s budget vote debate on Tuesday. Ramaphosa said it made sense for the efforts of SOEs...
Updated 32 minutes ago Imperial Holdings has entered into exclusive negotiations with Hollard Insurance and an unnamed associated party over the possible acquisition of Imperial’s interest in the Regent Insurance and Regent Life Assurance businesses, which hold long- and short-term...
Updated 56 minutes ago While global economic factors impacted South Africa’s weak growth prognosis, there were binding constraints coming from the electricity supply uncertainties, said Reserve Bank (Sarb) deputy governor Francois Groepe. On Tuesday, Stats SA said the country’s GDP...
Updated 1 hour 27 minutes ago Striking MTN employees kept up their picket at the company's 14th Avenue offices in Fairland, Randburg, ahead of an expected meeting on Wednesday to break the deadlock. With police officers guarding the entrance to the multinational company, a group of about 50...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...