Zuma acknowledges economy is sick

August 31, 2015, 5:05am
Image:SABC.co.za

Zuma acknowledges economy is sick

PRESIDENT Jacob Zuma warned on Sunday that the economy was "sick" and appealed to business and labour to prioritise saving jobs over profit margins and wage hikes.

Acknowledging that it could no longer be "business as usual", Mr Zuma appealed to business and labour to play their part to help save jobs in the present difficult economic climate.

He was speaking at the commercial launch of Medupi power station’s unit 6 in Lephalale, Limpopo, on Sunday.

He said the launch was a significant milestone for the country, but urged Eskom to ensure that they worked "with speed" to ensure that there were no further delays at Medupi as energy remained a "binding constraint" to economic growth.

The launch came four years behind schedule.

Last week, Statistics SA announced that SA’s gross domestic product contracted 1.3% quarter on quarter.

Mr Zuma said that once jobs were lost, the state had to step in but the government was "in the business of running the country" and it was businesses’ responsibility to run the economy.

"At the end, when the economy is not functioning, when workers are out, it becomes the burden of the government.

"Everybody says you (the government) are not running the country properly, you are not running the economy properly. But our job is to run the country — not so? — and the business sector is to run the economy."

If the private sector was only concerned about its profit margins, in the current economic climate, it meant that they "did not care".

"Reducing labour … so that you maintain profit margins — is that the way to go?" he asked.

At the same time, it was not on if labour overlooked the difficulties in the economy and continually demanded higher wages. This could result in job losses and, in the end, it would fall on the government to assist those who had lost their jobs or to help save jobs.

"Should we come together and recognise the fact that the economy is sick. How should we save jobs? Should we tighten our belts?" he asked.

He added that only the government had "tightened its belt", as announced by Finance Minister Nhlanhla Nene in his budget earlier this year. "Shouldn’t the private sector and workers also tighten their belts to save jobs and tailor the economy?

"It should not be business as usual, it should be business unusual," he said.

The government, business and labour were in talks in the mining and steel sectors in a bid to save thousands of jobs as the energy crisis, among other factors, began to bite.

On Monday the three parties are expected to sign a declaration on a raft of measures to save jobs in the sector. The Department of Trade and Industry has come to the rescue of the beleaguered steel industry, approving a 10% ad valorem duty on certain imported steel products, which currently enter the country free of duty.

It was announced on Friday, however, that approval of the import tariff would be subject to certain stringent conditions — including that steel producers refrain from increasing prices for their products subject to the duty and that they honour their commitments to reduce prices on some products.

Business and labour said last week that while these measures would help in the long term, an immediate reprieve from job losses would remain a challenge.

Mr Zuma said the parties should devise a way out.

The state was doing its part — through the nine-point plan he had outlined in his state of the nation address.

The plan was aimed at removing binding constraints to the economy, and boosting business and consumer confidence.

It included revitalising agriculture and agroprocessing, beneficiation, industrialisation, boosting small business, dealing with uncertainty around energy, improving the labour market, and boosting private sector investment and the ocean economy.

He said that while energy was a challenge, the launch of Medupi’s Unit 6 was the "light at the end of the tunnel".

Mr Zuma said he was "very pleased" that, by Sunday, there had been no load shedding for more than 20 days.

by Natasha Marrian and Sikonathi Mantshantsha: BDLive