Prepared text of the speech by Ian Ollis MP, DA Shadow Minister of Labour, in the Debate on the President's State of the Nation Address, February 15 2011:

Creating jobs will require strong leadership

Jobs are harder to create than we think. South Africans want to be a working people. Nobody wants to be unemployed or to sit on the side of the road and beg. To give people real dignity means that they need to be gainfully employed - to have a job. Visiting the Sheltered Employment Factories last year with the portfolio committee on labour, we saw how giving a disabled person a job gave them a certain feeling of usefulness, being able to produce furniture.

This gave them an income to enable them to look after themselves to a degree. It was just a pity to hear how the numbers of people employed in those factories had dwindled over the past decade. Places like that can be a light at the end of a very dark tunnel to many people, and, honourable president, the country does salute you for putting the emphasis in your speech this year on job creation. With over 35 % of our adult employable people out of work, unemployment is our biggest national crisis and a president who did not acknowledge that and empathise would be a national embarrassment.

In South Africa, we need to create the environment that stimulates much faster growth in the economy, leading to greater opportunities for advancement and new job opportunities for those many South Africans who would grab opportunities open to them. We need to make jobs for the unemployed our national priority.

In that vein, the DA welcomes the R20 billion in tax breaks outlined in the state of the nation address, the R10 billion from the IDC that will be put aside to stimulate job growth and the R9 billion jobs fund to be established through the Finance minister's budget this year. These are all steps in the right direction.

In fact, the DA has been proposing a Youth Wage Subsidy since 2004, and if these funds are used for this purpose, among others, then we of course must and will support that initiative. It is after all a DA policy proposal that we have been promoting for 7 years. We look forward to the youth getting new jobs as a result.

However, the New Growth Path tabled by cabinet points out some details that must be borne in mind when we begin sloshing around cash for jobs in the way that the SONA speech does: The Framework calls for a very specific kind of jobs growth, through ‘ "jobs drivers" and securing strong and sustainable growth in the next decade. Most of the projected new jobs will come from the private sector."  Now, honourable Speaker, we need to ask the president: "Sir, how exactly does the R39 billion translate into private sector jobs?" Of course, policies and budgets and speeches must work together or we won't create jobs at all.

President Barack Obama threw over $700 billion at saving jobs by bailing out banks and where is that money today? Many jobs were lost anyway and much of that money ended up being paid in bonuses to Wall Street executives instead of saving jobs of the ordinary workers. And we only have R39 billion. We are going to have to be much more careful with what we do with this money. If the tax breaks induce the likes of an Alcan to set up that elusive aluminium smelter at Coega, then a few thousand permanent jobs could be created and money may be well spent.

However, what South Africa was expecting in the SONA speech was some direction on how to create jobs. We had just witnessed the war of words that had broken out between Gwede Mantashe, the new Minister Oliphant, and Cosatu on the direction of the new labour laws and the conundrum over whether we should focus first on better quality jobs or more jobs. The Hon. Minister was quoted as weighing in on the debate by saying:

"Decent employment can only be successful when all stakeholders constantly keep in mind ... the context of the South African and global economies, social realities such as poverty, inequality and education levels, and the long-term goals for South Africa that must be weighed against short-term costs."

And

"A living wage, yes, at a later stage it's going to be part of these things."

She then later realised the storm that had begun and added:

"Let us not get into an either/or debate. We want jobs and we must strive for decent work."

But Hon President, there is a debate, a very valuable debate and South Africans are looking for direction on this issue. Mr Mantashe saw it quite clearly. He said:

"Our view is that jobs must be created. Once created, then those people can engage on conditions of employment. If you first negotiate conditions before you are in the job then you are putting the cart before the horse."

The reason that this debate is so important is because it goes to the heart of why there was such limited growth in job creation in the South African economy when the economy did grow. The reason lies at the heart of the fight over the new labour laws proposed under the previous labour minister and tabled in December for comment by minister Oliphant. The reason for the huge public outcry against these laws is that they will destroy jobs just at the time the President is allocating money to create them. And at the heart of the problem lie the unrealistic demands of Cosatu. The other labour unions and even Fedusa had very different proposals for the new legislation but Cosatu cried wolf in order to ban labour broking and end all temporary work and outsourcing in the republic - all for a few new union subscriptions and membership numbers for Cosatu.

Cosatu spokesman, Mr. Patrick Craven, confirmed this live on the radio when debating me recently on the subject. He said: "Mr Ollis has a point." He then went on to explain that Cosatu does believe that the shutting down of labour brokers and limiting of temporary work will make it easier for Cosatu to unionise members and grow their organisation and that this was the reason for their demands on labour brokers and temporary work. This is a travesty. The new labour laws will kill many, many jobs to create just a few new Cosatu members. What a disaster for the New Growth Path and the President's job creation programme.

Unfortunately, the President gave us no direction in this debate. If we want more jobs, then we need to completely redraft these awful labour law amendments and make them jobs-friendly by writing them in a way that creates and does not kills jobs. They need to allow for flexibility in the labour market and put a greater emphasis on skills development and cutting red tape. Cosatu will need to be told to back down so that we can assist the real poor and unemployed. Hon. President, you must give us direction in this matter.

Creating jobs in the long run in this country requires, as my friend Ryan Coetzee said on Twitter, that we adjust the risk/benefit equation for doing business in South Africa to attract the necessary job-creating investment. We must reward companies who take on additional apprentices and those involved with upskilling to allow the unemployed to take advantage of the billions announced in the State of the Nation address. Money in a pot doesn't create jobs. Programmes to train and educate do; taxbreaks to incentivise companies who take on the youth do; and flexible labour laws actually create, rather than destroy jobs.

However, small business is largely cut out of the tax incentive  regime announced by the president.  Small business is always the engine of jobs growth. The last 2 presidents and several budget speeches have promised small business assistance - where is it?

Small and medium sized companies will not be able to take advantage of the tax incentives as they cannot afford R200 million of new project investment or even the R20 million in expansion programmes in many cases. The tax incentives will really only benefit large institutional investors and big business - the top 500 companies or so. It will again be the usual suspects.

Finally, as Ebrahim-Khalil Hassen pointed out in the Business Report newspaper yesterday: How do the incentives deal with the informal sector of mostly small black businesses?

Mr. Hassen said :

"The dominance of black business in the informal sector is potentially the strategic entry point to broadening black participation in the economy, yet the presidential jobs programme does not address this."

Mr. President, apart from tax breaks and jobs funds, which we welcome, we need a plan that takes that money and puts it to work, as well as jobs-friendly labour legislation, a much improved skills training programme and small business incentives. Stronger leadership will be required to bring that about.

Issued by the Democratic Alliance, February 15 2011

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