Bloomberg News

South Africa Hires More State Workers to Reduce Unemployment

June 14, 2011

(Updates with Zuma comments starting in third paragraph.)

June 14 (Bloomberg) -- South African President Jacob Zuma said his administration has hired more workers and granted tax breaks to companies to encourage investment as it implements a plan to reduce unemployment.

South African companies fired more than 1 million workers after the global financial crisis hit, lifting the jobless rate to a peak of 25.3 percent in the third quarter of last year. The rate stood at 25 percent in the first quarter of 2011.

“In the year to March 2011, net formal employment grew by 42,000,” Zuma told lawmakers in Cape Town today. “The government sector created 133,000 new jobs. This compensated for the still-weak performance of the private sector.”

In his state-of-the-nation address on Feb. 10, Zuma announced plans to introduce tax breaks for manufacturers worth 20 billion rand ($3 billion) and establish a 9 billion rand job- creation fund to promote hiring.

Three projects worth a total of 4.1 billion rand have already qualified for tax concessions worth 1.3 billion rand, and they have created 364 jobs, Zuma said today. The jobs fund became operational last week and will aim to disburse at least 2 billion rand in the current fiscal year, he said.

“We recognize that unemployment in South Africa remains very high by international standards,” Zuma said. “While inviting foreign direct investments, we will also do all we can to protect local jobs and industries. We believe it is possible to do both.”

Unequal Society

South Africa remains one of the world’s most unequal societies 17 years after the end of all-white rule. The government’s efforts at bringing more of the black majority into the mainstream economy by forcing companies to sell stakes to black investors have been criticized by labor unions who say they have created a black elite.

The trade ministry is reviewing the country’s black empowerment policies and will present proposed changes to the Cabinet soon, Zuma said.

“We need black economic empowerment to address the monopoly domination of our economy,” he said. The government wants to shift the focus “away from equity investment and ownership towards productive activities.”

--Editors: Ben Holland, Philip Sanders.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Andrew Barden at barden@bloomberg.net


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