Oct 18, 2012
Salary increase freeze to cost SA R5bn in lost tax revenueBack
Agriculture|Africa|Econometrix|System|Africa|Europe|South Africa|United States|Manufacturing|Mining|Product|Services|Transport|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)
Other Macro and Micro News
Capital flight is the biggest impediment to radical economic transformation and is a bigger problem even than corruption, SA Communist Party deputy general secretary Jeremy Cronin said on Wednesday. Cronin and SACP general secretary Blade Nzimande released the SACP's...
South Africa’s mining industry will continue to evolve over the coming decades, eventually transitioning into a mechanised, modernised and automated industry staffed by a highly skilled, well paid and lithe workforce, Chamber of Mines acting CEO Roger Baxter said on...
South Africa has been ranked third, after China and Brazil, in a new country-by-country assessment of 55 renewable-energy markets in Africa, Asia, Latin America and the Caribbean. The Climatescope 2014 report and index, which has been compiled by Bloomberg New Energy...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
Updated 7 hours ago In the next 20 years, it was expected that, in Africa, more people would live in cities and towns than in rural areas, United Nations Habitat executive director Dr Aisa Kirabo Kacyira said at the Human Settlements Indaba that took place earlier this month in...
Updated 7 hours ago Tough-talking Human Settlements Minister Lindiwe Sisulu has committed government to building 1.5-million low-cost houses over the next five years, telling the Human Settlements Indaba in Johannesburg on Wednesday that the State would achieve this target through the...
Updated 7 hours ago Over the past 20 years there has been persistent concern about deindustrialisation in South Africa, as well as the fact that locally produced manufactured products have been increasingly displaced by imports.
Updated 7 hours ago Financial agreement for Ghanian independent power producer (IPP) Cenpower Generation Company’s $900-million, 350 MW combined-cycle gas-turbine power plant was finalised earlier this month, paving the way for the project’s construction to begin before 2015 in Tema,...
Updated 7 hours ago The revenue implications for South Africa of ‘base erosion and profit shifting’ by corporate taxpayers are firmly in the crosshairs of the Davis Tax Committee (DTC) and Judge Dennis Davis hinted last week that recommendations were being considered to “detect and...