NEWS & ANALYSIS

Our rescue plan for manufacturing – Dean Macpherson

DA MP says latest StatsSA QLFS figures show a loss of 105 000 jobs in the sector

DA presents a manufacturing rescue plan to grow the manufacturing sector and create jobs

6 August 2018

Today, in response to the continued terminal decline of the manufacturing sector in South Africa and related job losses, the DA presented a manufacturing sector rescue plan, ‘Manufacturing a new economic future.

The rescue plan was presented following a meeting that DA Shadow Minister of Trade and Industry, Dean Macpherson MP, his deputy, Ghaleb Cachalia MP, DA Member on the Finance Portfolio, Gwen Ngwenya MP, and DA Spokesperson for Economic Development in Gauteng, Janet Semple MPL held with representatives of manufacturing company, Efamatic Machine Tools, and other manufacturing industry players.

Manufacturers present at the meeting pointed out that policy uncertainty, a restrictive regulatory environment, inflexible labour market and a populist drive to expropriate land without compensation were drying up investment in the sector. The effect of all these factors means that jobs have been lost and the sector’s ability to create jobs is crippled.

In addition, manufacturers are facing the added pressure of cost escalations resulting from a potential carbon tax, sugar tax, waste management tax and the generally slow response by the Department of Trade and Industry (DTI) to protect local industry from highly subsidised imports.

The latest Quarterly Labour Force Survey indicates that manufacturing employment has shrunk by 3.1% from June 2017 to June 2018, resulting in a loss of 105, 000 jobs in the sector.

In order to increase the share of the manufacturing industry’s contribution to the Gross Domestic Product and create more jobs, the DA’s rescue plan focuses on value addition, skills development and fair competition for local industries.

Some of the key priority areas for the DA’s manufacturing plan for job creation include:

Reduce red tape

 The DA has launched a Red Tape Impact Assessment Bill which has been gazetted aimed at assessing legislation in order to reduce the regulatory burden it places on small business.

Policy Certainty

Removal of problematic policies such as the Promotion of Investment Act, Expropriation Bill, The Land Holdings Bill, the Mineral & Petroleum Resources Development Act (MPRDA) and the Mining Charter will protect foreign investors’ rights and promote investment.

Prepare skills base for a modern economy: 4th Industrial Revolution

 Innovation can be enhanced by allowing easier access for foreign skilled workers to attain visas in SA. This will require visiting the current regulations on visas and raising the strategic importance of visas linked to scarce skills.

Reduce energy costs

 Renewable energy should be directly sourced from manufacturers to reduce energy costs. The break-up of the energy sector, as proposed by a Private Members Bill that the DA is currently drafting, will go a long way to reducing the cost of energy.

Steel Tariffs

 There needs to be a review of tariffs on imported steel to keep prices competitive for local suppliers and build the competitive downstream sector. The DTI has protected monopolies like Arcelormittal South Africa (AMSA), driving up the local price of steel while the downstream sector has received no support, lost jobs and had to pass on price increases to consumers.

Incentives

 The DA would advocate unfreezing the budget for the Manufacturing Enhancement Programme. Lowering corporation taxes for manufacturers to 15% conditional on re-investment in capacity to expand production, skills training and Corporate Social Investment (CSI).

The DA’s manufacturing rescue plan is a complete departure from the ANC government’s sterile and ineffective economic policies and offers essential building blocks that would densify our manufacturing sector and create jobs that are relevant to the 4th industrial revolution. Ultimately, the government should be seized with getting our country out of the humanitarian crisis that is unemployment. This plan would be the first step of reinvigorating this sector.

Issued by Dean Macpherson, DA Shadow Minister of Trade and Industry, 6 August 2018