NEDLAC

GDS AGREEMENTS - PROGRESS REPORTS

BRIEFING TO THE PORTFOLIO COMMITTEE ON LABOUR

29 AUGUST 2006

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STRUCTURE OF THE REPORT

–INTRODUCTION

–CONTEXT

–INTRODUCTION

–THEMES AND KEY INTERVENTIONS

–PROGRESS REPORT PER THEME

• COMPLETED TASKS• TASKS INITIATED• KEY HIGHLIGHTS• OUTSTANDING TASKS• IMPACT

–CONCLUSION

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INTRODUCTION

The GDS agreements were finalised on 7June 2003 at the Growth and Development Summit convened by the President of the Republic of South Africa.

The GDS is a set of targeted interventions by Nedlac social partners to address key challenges facing the country.

The first 6 months were spent in translating the commitments into various action plans.

2004 was dedicated to implementing the agreed action plans and seeking agreements on those areas that remained unresolved.

2005 focused on addressing bottlenecks and soliciting buy-in from strategic institutions that were identified as critical for purposes of implementation.

Since the GDS does not exist in isolation, the implementation processes are often impacted on by various macro-economic factors. The unpredictable swings in the exchange rate, the trade environment, the commodity markets, etc. at times pose a huge challenge for the GDS implementation.

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CONTEXT

1. The constituencies of Nedlac - government, business, labour and the community - reaffirmed their commitment to social dialogue and working together to address the pressing social and economic challenges our country faces.

2. The constituencies committed themselves to a common vision for promoting rising levels of growth, investment, job creation and people-centred development. The vision is aimed at making South Africa:

a. The leading emerging market and destination of first choice for investors whilst retaining and expanding social equity and fair labour standards.

b. A productive economy with high levels of service, a skilled workforce and modern

systems of work organisation and management.

c. A society in which there are economic opportunities for all, poverty is eradicated, income inequalities are reduced and basic services are available to all.

d. A society in which our people, our most precious resource, are given the opportunity and support to develop to their fullest potential.

e. A society that promotes the values of social equity, fairness and human dignity in the global economy.

3. The GDS is the “war plan” agreed to by all social partners as one, among various interventions, to achieve these objectives.

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OVERACHING OBJECTIVES OF THE GDS

Through the GDS, the constituencies aim to make a contribution towards halving

unemployment by 2014 and eradicating poverty. The GDS agreements are therefore part of our collective efforts to achieve this objective through;

a) Building an enduring partnership – Promoting a shared vision of South Africa’s growth and development strategy to frame sector and developmental agreements and lay the basis for constituency partnerships in action.

b) Addressing urgent challenges – Selecting from many possible interventions those which hold the promise of the greatest possible impact in the shortest possible time for accelerated investment, job creation, improved efficiency and productivity, greater social equity, and a fairer distribution of economic opportunities and rewards, while undertaking serious social dialogue on broad policy frameworks.

c) Lending a hand – Securing the commitment and active participation of all constituencies in those areas identified for prioritised action in ways that build on lessons learnt from development programmes.

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GDS GUIDING PRINCIPLES

The GDS is not about doing everything, but it is about doing what is do-able.

The GDS is about targeting carefully selected areas which are capable of delivering on a greater scale.

The GDS is not a panacea for all the social and economic development ills in South Africa, but an important intervention towards addressing some of the challenges on these fronts.

The implementation of the GDS agreements is not an event, but a set of multiple processes aimed at defining concrete steps and interventions at various levels.

The bulk of the GDS interventions are medium to long term in nature - therefore the impact of most of these efforts tend to be medium to long term.

It is also becoming evident that, as time passes, certain agreements reached at the GDS become absorbed into the normal decision making of the public and private sectors without there necessarily being specific acknowledgement of the GDS origins.

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Key Interventions Per Theme

More Jobs, Better Jobs and Decent Work for All

• Public Investment Initiatives

• Expanded Public Works Programme

• Sector Partnerships Strategy

• Local Procurement

• Small Enterprise Promotion

• Support for Cooperatives

• Jobs Impact and Monitoring

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Progress Report under each Theme

Are we doing what we planned?

•The Nedlac report on the National Co-operatives Bill and Policy finalised.

•A study tour undertaken to four countries (Italy, Kenya, Japan & Spain.)

•Chemical Sector Partnership Strategy and CSP finalised

•Sector summits held in Metals and Engineering, Chemical, Construction, Auto, ICT

Tasks Completed

Tasks Initiated

•Public Investment Initiative•Expanded Public Works Programme•Local Procurement•Small Enterprise Promotion

•Support for Cooperatives•Sector Partnership Strategy•Jobs Impact and Monitoring

Key Highlights

•Govt has allocated over R370bn to infrastructure Development.

•State owned enterprises are championing the infrastructure development projects.

•348 900 cumulative total work opportunities created since inception.

•A Co-operatives Directorate

has been established in the Dti.

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Key Interventions Per Theme

Addressing the Investment Challenge

• 5% Investible Income

• Administered Prices and Import Parity

• Contractual Savings - Pensions and Provident Funds

• Housing

• Financial Sector Charter

• Financial Sector Summit Agreements

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Progress Report under each Theme

Are we doing what we planned?

The first Ministerial draft policy framework has been discussed and

a revised draft still outstanding.

A draft agreement has been

produced and it waits further inputs from the social partners

A Conference of the Retirements Funds Trustees held in 2004.

Financial Sector agreements are being implemented - Umzansi Account, Financial Sector Charter Council completed

Tasks Completed

TasksInitiated

Key Highlights

•Retirement funds reforms •Investigations on Administered Prices and Import parity Pricing•5% Investible Income•Housing

•Pensions and Provident Fund Trustees Conference

•Finance Sector Charter

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Key Interventions Per Theme

Advancing Equity, Developing Skills, creating economic opportunities for all and extending services

• Black Economic Empowerment

• Employment Equity

• Promoting Literacy

• Learnerships

• Strengthening SETAs

• Education

• Access to basic needs

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Progress Report under each Theme

Are we doing what we planned?

The Minister of Education briefed Nedlac on the key tenets of the National Education Policy and strategy. Ministerial Round table discussions on Labour Market Policy Review. The FET legislative is being reviewed esp. in the light of Asgi-SA and JIPSA

Ministerial Round table discussions on Labour Market Policy Review in 2006.

BBBEE Codes finalised.

Over 155 460 learners registered with SETAs in structured learnership and apprenticeship programmes. 82% black, 43% women and 2% people with disabilities

Tasks Completed

TasksInitiated

•Review Barriers to entry level jobs•BBBEE Codes•EE Road Shows•Strengthening SETA Boards•Learnership - Targets•MPCCs - Exceeded targets

•Promotion of Literacy•Community Representation on the Seta Boards

Key Highlights

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Key Interventions Per Theme

Local Action Implementation

• Local Level Planning

• Local Economic Development

• Provision of the Infrastructure and access to basic needs

• Service Delivery Mechanisms

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Progress Report under each Theme

Are we doing what we planned?

The Business Trust established a

5 year Facilitation Fund of R100

million for the EPWP. A model has been developed with the Dti and various industry associations for seconding staff on request. The release of shop stewards has been incorporated into Sector Summit Guidelines.

Local Economic Development

Local Level Planning

Provision of the Infrastructure and Access to basic needs

Service Delivery Mechanisms

MPCCs have increased from 37 to 86 and a strategy for the next phase which will see an MPCC in every

municipality by 2014 has been

finalised for submission to Cabinet.

Government is implementing the Municipal Infrastructure Grant (MIG) programme

Tasks Completed

Tasks Initiated

Key Highlights

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SUMMARY OF COMPLETED TASKS

Retirement Funds Trustees Conference

Public Investment Initiatives – Infrastructure Investment Pool

Pre-Nedlac Conference on Co-operatives

Cooperatives Policy

Cooperatives Legislative Framework

Study Tour on Cooperatives

Implementation of Finance Sector Summit Agreements

Municipal Infrastructure Grant Programme

Framework for the Expanded Public Works Programme Projects

Chemical Sector Partnership Agreement and Govt-led Customised Sector Programme for the Chemical sector

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SUMMARY OF COMPLETED TASKS

Broad Based Black Economic Empowerment Codes

Technological Platform to facilitate opportunities for BEE SMMEs

Road shows on the Employment Equity resulting in significant improvement in reporting

National Skills Development Strategy

Strengthening of SETAs – Senior Trade Union officials/Office Bearers serve on SETA Boards

Business Trust life-span Extended

Exceeded the target on Multi-Purpose Community Centres (MPCCs)

The Afrikaanse Handelsinstituut (AHI) has signed an agreement with the Minister of Provincial and Local Government to promote local economic development and infrastructure investment at district municipality level and various activities have been initiated to implement this initiative.

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Jobs creation and Sector performancesIMPACT

Industry

Relative size in Q3

2005Seasonally adjusted annualized change from previous quarter

(Percentages)

  2003 2004 2005

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Agriculture, forestry, fishing 2.6 -2.9 -7.7 -17.2 -5.6 2.4 3.4 7.1 3.4 6.4 2.9 10.2

Mining & quarrying 6.4 3.1 6.0 6.5 2.0 1.0 1.3 7.6 -2.8 9.6 3.9 -0.7

Manufacturing 16.4 -3.4 -4.7 -3.8 -2.1 9.0 11.311.

0 3.0 -2.3 7.9 5.6

Electricity, gas and water 2.2 -1.6 -0.8 -0.4 0.8 3.6 3.2 4.8 3.7 0.3 0.3 -1.7

Construction 2.7 7.2 6.5 7.9 6.015.

6 15.6 9.0 4.5 11.2 12.7 9.5

Wholesale and retail trade, hotels & restaurants 13.7 5.8 8.2 9.3 9.0 2.8 4.0 4.5 6.4 5.8 6.9 6.3

Transport, storage and communication 9.8 6.4 4.2 4.1 5.3 4.0 4.1 5.5 5.6 5.1 6.3 6.1

Finance, real estate, and business services 19.5 4.0 2.8 4.8 4.3 8.7 11.2 9.1 8.9 10.6 4.2 4.5

General government services 12.5 1.2 0.8 0.9 0.8 1.1 1.2 1.1 1.7 1.9 1.2 0.9

Personal services 5.3 4.6 4.9 2.2 -0.6 0.8 0.7 3.8 2.1 2.2 2.6 3.1

                         

Total value added 91.1 2.3 2.0 2.4 2.6 5.0 6.2 6.6 4.4 4.7 5.1 4.3

                         

Tax less subsidies on products 8.9 3.6 2.8 1.9 2.8 4.8 9.1 6.9 2.6 3.3 9.1 3.3

                         

GDP at market prices 100 2.5 2.1 2.3 2.6 5.0 6.5 6.6 4.2 4.6 5.4 4.2

Source: Stats SA, Statistical Release, November 2005

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Labour Market

Labour market indicators September 2001 -2005

  2005 2004 2003 2002 2001

           

Employed 12301 11643 11424 11296 11181

Unemployed 4487 4135 4434 4936 4655

Labour Force 16788 15778 15858 16232 15836

Not economically active 12909 13527 13080 12295 12281

Population of working age 29697 29305 28938 28527 28117

Discouraged workers 3312 3948 3773 3194 2994

           

Unemployment rate 26.7 26.2 28.0 30.4 29.4

Labour participation rate 56.5 53.8 54.8 56.9 56.3

Labour absorption rate 41.4 39.7 39.5 39.6 39.8

Source: Statistics SA, Labour Force Survey

IMPACT

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Employment by Industry

0

500

1000

1500

2000

2500

3000

3500

2001 2002 2003 2004 2005

Agriculture

Mining

Manufacturing

Utilities

Construction

Trade

Transport

Finance

Community services

Private Households

Unspecified

Source: Statistics SA, Labour Force Survey

IMPACT

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Employment by Industry

  2001 2002 2003 2004 2005

           

Agriculture 1178 1420 1212 1063 925

Mining 554 559 552 405 411

Manufacturing 1620 1633 1550 1714 1706

Utilities 94 84 91 99 100

Construction 634 605 664 824 935

Trade 2454 2194 2429 2542 3024

Transport 546 574 537 563 616

Finance 1035 1084 1098 1147 1296

Community services 1989 2043 2180 2185 2192

Private Households 1034 1029 1075 1075 1067

Unspecified 42 72 34 26 29

           

Total 11181 11296 11424 11643 12301

Source: Statistics SA, Labour Force Survey,

IMPACT

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OUTSTANDING TASKS- WORK IN PROGRESS

– Finalising the agreement on 5% INVESTIBLE INCOME

– Finalising Retirement funds reforms

– Finalising Co-operatives Strategy

– Education

– Cooperatives Conference

– Participation of Community Constituency on the SETA boards

– Building social dialogue at local level

– Finalising Comprehensive Social Security framework

– Land reforms

– Cooperatives Banks Bill

– Sector Strategies in Metals and Engineering, Construction, Agriculture

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CONCLUSION

Real gross domestic growth registered twenty-three quarters of uninterrupted increase and rose at an average of 3,5% over this recovery, signifying an appreciable increase in real production per capita.”

The performance of the South African economy has been positive for some years now. The SARB reports that the upward phase in the business cycle, since September 1999 or 71 consecutive months, is the longest upswing in recorded history.

The main drivers of the 4,2% increase in the real GDP are the following three sectors: the manufacturing industry, wholesale and retail trade, hotels and restaurants, and the finance, real estate and business services. Each of these three sectors contributed 0,9% growth over the previous quarter to the real GDP. The transport, storage and communication sector contributed 0,6% and the construction industry contributed 0,3%.

The total number of people employed in South Africa in September 2005 amounted to 12,3 million. This is an increase of 658 000 people or 5,7% compared with September 2004. In nominal terms employment has been growing slowly between 2001 and 2004.

The GDS interventions are indeed bearing results in some areas.