Joblessness will remain intractable
bdlive.co.za - Jul 29th 2014, 14:24
The days of high unemployment in South Africa were far from over and the creation of jobs will not be as quick as desired, because of the country’s below-potential economic growth, Reserve Bank governor, Gill Marcus said on Friday.
The Bank recently revised South Africa’s economic growth forecast for this year to 1.7% from 2.1% previously.
The International Monetary Fund quickly followed suit, last week cutting the country’s economic growth forecast for this year to 1.7% from 2.3% previously.
Labour strikes, electricity supply problems and sluggish demand locally and globally were constraining South Africa’s growth potential.
The government has been the main driver of employment since the recession. Nevertheless, it cannot do that as in the past because its finances are now under pressure.
"The high level of unemployment, about 25%, is expected to persist and employment growth is expected to remain constrained, particularly in the private sector," Ms Marcus said.
The private sector has blamed some of South Africa’s policies, particularly labour laws and strikes, for its inability to increase employment. Business confidence levels remain low, which does not bode well for job creation in the private sector.
Local businesses have commended the adoption and implementation of the National Development Plan as a policy action plan for economic growth and development.
South African Chamber of Commerce and Industry chief operating officer, Peggy Drodskie, said much more needed to be done to ensure that strikes were resolved as quickly as possible. "Manufacturers are unable to fulfil orders on time due to the strike by metal and engineering workers.”
A protracted strike at platinum mines that ended in June and a wage strike by more than 200,000 workers in the steel and engineering sectors have cut output, weakened economic growth and dented confidence levels.
"If companies cannot fulfil their contracts (because of industrial action), the likelihood that they will get more is reduced a lot," Ms Drodskie said.
Addressing shareholders at the Bank’s 94th ordinary general meeting, Ms Marcus said the monetary policy committee would remain focused on its core mandate of price stability. However, it would also be mindful of the effect of its policy actions on economic growth.
These sentiments have already been reflected in the Bank’s decision to raise interest rates by 25 basis points as opposed to the usual 50 basis points.
Ms Marcus reiterated that low interest rates could not guarantee economic growth.
"Many of the problems the country faces are not part of the Bank’s mandate, nor does the Bank have the policy levers to address these issues," she said.
Further, it was announced at the general meeting that South Africa’s former auditor-general, Terence Nombembe, would join the Bank as a nonexecutive director.
Mr Nombembe said in an interview after the appointment announcement that he felt "good" about joining a reputable institution. "I’m feeling good because I’m joining an institution that shapes the stability of the country, the stability of the economy and gives guidance to how things can be done professionally as well."
The Bank has started the process of further regulating the number of shares any individual or company can hold.
It has limited the number of shares any individual and their associates can own to 10,000.
Individuals who do not disclose owning more than 10,000 during a disclosure period will be forced by the Bank to decrease the number of shares they owned.
Ms Marcus stressed the constitutional mandate of ensuring that no entity could impose undue influence on the Bank.
Shareholders commended the Bank leadership for showing commitment to the management of monetary policy despite the challenging economic environment.
This, they said, ensured the Bank stood out as a "beacon of excellence and wisdom".
The Bank’s shareholders reappointed PwC and SizweNtsalubaGobodo as the external, independent auditors for the 2014-15 financial year.From DFM Publishers (Pty) Ltd
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