Speaking Notes: Deputy President Motlanthe at the Inaugural Economic Development Conference


30 May 2011

Programme director;
Ministers and Deputy Ministers;
Leaders of organised labour, business and civil society;
Representatives from academia, research institutions and multilateral agencies;
Directors general and other public servants;
Colleagues and friends;
Ladies and gentlemen:

I am pleased to welcome you all to this inaugural Economic Development Conference convened by the Minister of Economic Development, Ebrahim Patel.

We expect this to be an annual event that will help all of us reflect on, learn from and advance both policy debates and practical initiatives aimed at achieving a more equitable, cohesive and prosperous South Africa.

This conference comes at a particularly important time for the global economy. The past two years marked a clear shift in international economic relationships.

On the one hand, the economic model in the global North led to a sharp economic decline starting in 2008, and continued instability since then. In contrast, the global South saw a relatively rapid and strong recovery, led above all by continued extraordinary rates of growth in China and India.

For South Africa, this strategic conjuncture brought opportunities and lessons in both the economic and policy-making arenas.

In the economy, we saw relatively rapid recovery in the GDP after three quarters of contraction in 2009. In contrast, both employment and private investment returned to growth slowly.

Only in the past six months have we seen a return to job creation, with formal-sector employment gains in particular.

Still, employment remains about 5% lower than it was two years ago – a situation South Africa can ill afford, given high joblessness even before the downturn.

While we welcome the growth in employment, we must still ask how we can ensure it is more sustainable in the future.

We cannot continuously create employment in the upturn, only to have massive job losses in downturns wipe out the gains.

Above all, that requires growth in employment to produce goods and services to meet the needs of the majority of our people in South Africa and in our region as well as for overseas markets.

This is one of the lessons that more countries are learning. Private investment remains stagnant relative to the GDP recovery. As a result, total investment has fallen back below 20% of the GDP – lower than desirable for sustained growth.

The increase in public investment somewhat offset the losses. Still, if we are to achieve our goal of five million new jobs by 2020, we have to do more to crowd in the private sector and support increased domestic savings in order to secure long-run development.
 
In policy terms, the Framework Response to the global downturn agreed between the Nedlac constituencies pointed the way toward improved collaboration between stakeholders around economic development.

The question we now need to ask is to how to sustain this kind of constructive and active solidarity. We need to reflect on and learn from our successes in this critical area of social dialogue.

Both the economic trends and the experience of social dialogue point to the need to prioritise employment creation in economic policy.

This priority is articulated in the New Growth Path, which provides the overarching strategic direction for our economic policies. It is critical because it shapes a twinned emphasis: first on equity and inclusion, and second on sustainable economic growth and development on the other – that is, growth that is increasingly green, efficient, diversified and regionally integrated.

In this context, the New Growth Path points to the core role of the state in enabling employment-creating growth.

On the one hand, the state must support more a more efficient economy overall, with a capacity to react rapidly to changing conditions and ensuring adequate infrastructure systems, education and social services.

For this reason, we have intensified efforts to improve quality education and skills development and committed to high levels of public investment.  This is accompanied by a commitment to reduce red-tape.

On the other hand, the state must intervene systematically and consistently to transform exclusionary economic systems and structures that reproduce joblessness and inequality.

To achieve this end, it must encourage more labour intensive sectors.

In that context, we will support new forms of ownership that empower our people on a mass scale – small and micro enterprise but also collective and social ownership.

To achieve these aims, given our apartheid history, rural development, overcoming inequalities in education and access to skills and strong support for agriculture, light industry and productive services are particularly important.
 
Programme director,

We have a long-standing vision for our society: a non-racial, non-sexist, democratic South Africa in which citizens have decent livelihoods. The challenge has always been how best to achieve this vision in economic, not just Constitutional terms.

From this standpoint, the New Growth Path is useful because it directs all of us to focus on critical need to reform the structures and systems of the economy to achieve sustainable equity, rather than stopping with the transformation of political and service delivery systems.

This conference forms an important engagement in this context.

Our discussions here start from the assumption that we need to achieve job creation on scale.

This will require among others economic growth that is also more equitable and inclusive. In that context, we welcome concrete and practical ideas as well as constructive efforts to identify where stakeholders represented here can work together. And of course like any such meeting, a central benefit is to strengthen networks and communication, which in itself opens up new opportunities.

Our discussions here should have real implications for all participants in terms of how we take forward our common project. They should help us overcome differences in interests and ideology in order to achieve our common long-term aim of an equitable, strong, and dynamic economy.

How do we ensure our choices around the economy contribute to a society we want to live in – a society that is coherent, culturally and socially vibrant, empowered, prosperous, dynamic and environmentally friendly? If we are choking on pollution, worried about feeding our families, worried about crime, worried about HIV/AIDS – then accelerating economic growth alone will not help us.

In this conference, then, we expect debate and discussions directed toward achieving our common vision.

I wish you all a successful, productive and enjoyable engagement. We look forward to receiving a report on the outcomes that can help with policy implementation.

I thank you

The Presidency

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