The work ethic and efficiency of South Africa’s labour force would have to be improved if the country was to grow its manufacturing sector to effectively compete with its cheaper and more efficient Chinese counterpart and boost job creation, Gauteng Economic Development MEC Nkosiphendule Kolisile said on Thursday.

“Manufacturing is the most labour-absorbent sector in South Africa [and] plays a central role in any growth strategy that is aimed at job creation,” he said at the Gauteng Department of Economic Development’s 2013 Broad-Based Black Economic-Empowerment Dialogue, in Boksburg.

The country’s unemployment rate was measured at 24.9% in the fourth quarter of 2012, a marginal improvement compared with the 25.5% recorded in the third quarter. Gauteng was expected to contribute 1.5-million of the 5-million jobs that the New Growth Path aimed to create by 2020.

However, Kolisile stated that attention would have to be given to bringing down the price of locally manufactured goods and services to compete with the cheaper alternatives abroad.

“If we want the private sector to meet the local procurement targets, we, as government, must also take action,” he told delegates.

Another hurdle to progressing local manufacturing and job creation was the high operational costs of doing business in South Africa, in particular the country’s ever-rising electricity tariffs.

The National Energy Regulator of South Africa on Thursday granted State-owned power utility Eskom 8% yearly increases in electricity tariffs between 2013 and 2018. This followed an adjudication of the parastatal’s revenue application for the third multiyear price determination period, which requested an allowable revenue allocation of nearly R1.1-trillion, which translated to yearly increases of 16% over the five years.

In Gauteng, the struggling manufacturing sector, which currently employed 600 000 people, has, in line with the countrywide trend, been shedding jobs since 2009 and showing slow recovery from the 2008 recession.

“To respond to this, we as provincial government, labour and civil society will have to work together in reducing the vulnerability of our economy,” Kolisile said.

He also suggested that social grants were fuelling unemployment and prosposed implementing the prerequisite that persons would have to be employed to qualify for such subsidies.

Meanwhile, Manufacturing Circle CEO Coenraad Bezuidenhout said the private sector still had some way to go in terms of buying into government’s local procurement drive.

He highlighted the importance of local procurement, which was amplified by, among others, the fact that the local manufacturing sector had lost 300 000 jobs over the past five years.

Bezuidenhout stated that despite many of South Africa’s politicians questioning the country’s ability as a manufacturing destination, it had the required capacity in terms of labour, infrastructure and institutional and financial systems to achieve this.

Reiterating concern over the impact of high administration and electricity costs on manufacturing in South Africa, he indicated that a conversation between municipalities and the industrial sector would have to be fostered.

“Municipalities are still placing substantial markups on the electricity prices they charge industrial users. This is not sustainable and has resulted in many factories closing and many jobs having been lost,” Bezuidenhout pointed out.