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Campaigns | Declarations
Declaration by Manufacturers and Trade Unions on Industrial and Economic Policy interventions needed to create decent jobs
10 May 2010
Support for IPAP2
We, the undersigned, representing workers and employers in the manufacturing industry, strongly support the Industrial Policy Action Plan (IPAP2), recently released by the Economics and Employment cluster of government. We believe that the measures proposed in the plan, are urgently needed to prevent further loss of productive capacity in our economy, and to create decent jobs on a large scale. The IPAP correctly places the revival and expansion of our manufacturing sector at the heart of a broad-based industrialisation strategy.
We call on government to ensure that adequate resources are deployed to fund the IPAP2, put in place supportive policies to ensure its success, and introduce effective co-ordination within government and with broader society, to advance its objectives.
Synchronise macro and micro economic policies
Until now, the goals of our industrial strategy have not adequately been supported by aspects of our macroeconomic policies.
We therefore welcome government’s commitment, stated in the IPAP, to synchronise macro and micro economic policies. The overarching objective of macro-economic policies, in the context of South Africa’s economic and social realities, must be to promote productive investment, and large scale creation of decent, sustainable jobs. The most urgent concern for employers and workers in manufacturing, in this regard, is the negative impact of the overvalued and volatile currency, on the ability of our industry to grow, invest, and compete. If IPAP2 is to succeed, this concern must be addressed.
The most effective short-term measures needed to assist our manufacturing sector to recover from the recession, allow government the space to implement IPAP2, and begin to create decent jobs on a large scale, include:
- on an urgent basis, interventions to ensure an appropriately valued, competitive and stable currency, which will allow manufacturing and other sectors of the economy, to compete on a similar footing to other developing countries;
- Reduction in real interest rates, and introduction of concessional finance for productive investment. Currently, the unavailability of finance, and the exorbitant level of lending rates by the financial sector, makes borrowing prohibitively expensive;
- Measures to create a preferential procurement framework that promotes local industries and locally produced products to create country competitiveness. The luxury and cheap manufactured imports unfairly retard the ability of domestic producers to compete, and threaten to deindustrialise our economy, as well as deepening our balance of payments problems. This call should not be interpreted as protectionism, but nurturing our domestic industry.
These measures are critical if we are to stem the massive job loss, the threat of deindustrialisation, and revive and expand the productive capacity which has been seriously eroded by the economic crisis.
Such interventions would not be unique to South Africa, but have been widely used, and continue to be used, by emerging markets to advance their industrialisation strategy. Failure to address these, in particular the currency, which has been exacerbated by the recent weak Euro, will continue to erode the ability of South African producers to compete globally and defend themselves against cheap imports, with resultant further employment losses. The IPAP2 does support movement in this direction, and we need consistent messages on these issues from all quarters of government. Cabinet needs to ensure that there is unqualified support for the IPAP from all Departments, if we are to succeed in addressing deficiencies in the existing industrialisation and economic development trajectory.
Government, Business and labour must lead the country out of recession
These proposed macro-economic interventions will play a key role in leading the country out of recession, and helping to put the country on a new growth path. In addition, the IPAP proposes to build on government’s counter-cyclical interventions, in a way which could make a major contribution to building our manufacturing sector. If the large scale infrastructure investment programme – over R800 billion in three years- is to have the desired impact, the proposals of IPAP need to be implemented with urgency and determination. In particular, greater urgency is needed in:
- Introducing the programme of preferential competitive procurement by government to promote locally manufactured products, including introduction of the necessary legislation;
- Fast-tracking proposals to harness this infrastructure investment to develop neglected sectors (such as domestic production of heavy duty trucks and buses, and beneficiation of raw materials);
- Requiring all state agencies, including State Owned Enterprises (whose investments constitute over half of the Governments infrastructure programme), and DFI’s, to actively promote the IPAP agenda, inter alia through their procurement practices, and assisting with access to concessional finance.
All South Africans can support government’s efforts to build our domestic industry by buying locally-produced goods. From our side we pledge to increase the range and quality of locally produced goods available to South African consumers.
A further challenge which needs urgent attention is to find an approach to our energy needs, which avoids the current excessive price increases, which threatens tens of thousands of jobs, at a time when our country can least afford it. We commit ourselves to working with government to finding mutually acceptable solutions.
Jobs are the number one priority for our country, and for Ipap2 to succeed on the necessary scale, requires urgent, co-ordinated and serious action by government, together with all stakeholders.
We, as those in business and labour most affected by these policies, are committed to do everything in our power to address these critical challenges, and pledge to work with government to that end.
Original signatories of the declaration are:
Congress of South African Trade union (COSATU)
Federation of Unions of South Africa (FEDUSA)
National Council of Trade Unions (NACTU)
National Association of Automotive Component and Allied Manufacturers