business

By Minister Thulas Nxesi

I believe that we can all agree that, at the end of the day, a decisive reduction in the unacceptably high level of unemployment is dependent on higher economic growth resulting in more jobs. This process is led by business investing in the private sector with resultant economic development and rising employment.

Nonetheless, as the President has argued, government as the largest employer in the country and a large-scale procurer of goods and services, has a major role to play both to create an environment conducive to investment, growth and development, but also to directly mitigate the impact of unemployment through social protection measures, demand-led training, targeted job creation and preservation.

To this end government, has strived to strengthen and expand its programmes for skills development and job creation, particularly in respect of the youth, seeking to mobilise and coordinate resources across government. In so doing, government has also sought to deepen and increase the areas of cooperation with the private sector. Initially focused on the strategic areas of energy security, port and inland logistics, and crime and corruption, cooperation has been expanded to include issues of skills and employment.

Which brings us to the expanded roll-out of government jobs and skills projects. First, I need to flag that this orientation and vision has a very long pedigree. Indeed, it is captured in the National Development Plan 2030 adopted in 2011. The earlier example of the Expanded Public Works Programme has been in existence for over two decades, and is utilised by local governments of all political persuasions.

So the present roll out of UIF Labour Activation Programmes (LAP) which started on April 6th in Gauteng – in tandem with the provincial Nasi Ispani Project - is part of this long tradition, expanded now to pool resources across departments and provinces, and in partnership with the private sector.

Following the 2019 elections, the mandate of the old Labour Department was expanded to become the Department of Employment and Labour. The reconfiguring of the Department to reflect the mandate has been taking place ever since. Part of this process is to leverage the existing resources of the Department for job creation and preservation. The Labour Department had long been involved in skills training of the unemployed. One of the things we did after 2019 was to re-orientate training towards in-demand and scarce skills with the guarantee of a job at the end of the programme, replacing the previous training for training’s sake mentality. Another critical part of the reconfiguration of the Department was to undertake a structural architecture review of the funds – the UIF and Compensation Fund – carried out by an independent analyst, and with the express purpose of greatly strengthening client service and ensuring necessary financial controls, systems, governance, accountability, risk and compliance mechanisms are in place.

I need to say more about the central role of the UIF in the work of the Department. The UIF is best known for paying out unemployment and maternity benefits, drawing on the contributions of employers and employees, but, in fact the UIF Act gives it a much larger mandate to mitigate unemployment, and includes funding:

• Job preservation in the form of the temporary employer/employee relief scheme (TERS) – administered by the CCMA enabling distressed companies to continue to pay their employees, and the business turnaround and recovery programme run by Productivity South Africa;
• training of the unemployed for employment (now anchored on a demand-led approach, with jobs at the end of it);

And job creation through:

• supporting enterprise development and entrepreneurship; and
• economic growth and job creation through investment of the reserves of UIF and the CF.

It was in furtherance of this mandate that the UIF established the LAP, where these kind of programmes have been running since before 2019, and will continue after the 2024 election. (The bizarre claim that the current LAP projects are a ‘rip off’ of the irregular Thuja proposal is historically inaccurate.) The decision of government to ‘massify skills development and job creation’ in response to persistent high levels of unemployment and sluggish growth utilises the LAP platform – expanded to pool resources across departments and entities, and to partner with the private sector. The funding model for the current expanded LAP provides a sliding scale of funding support for programmes with 70% of partners contributing, and a maximum 30% would being non-contributors (i.e. receiving 100% UIF/LAP funding), together with projects across government departments and entities on a rand-for-rand funding basis, for example including working with the IDC and the Department of Basic Education to recruit and pay salaries for Teacher Assistants designed to employ 200,000 unemployed graduates (part of the Presidential Youth Employment Stimulus programme).

The current expanded LAP ‘Training for Employment and Entrepreneurship’ programme sets ambitious targets: 2 million opportunities over three years, consisting of jobs preserved and created; demand-led skills training and entrepreneurial opportunities. Currently, 333 projects have been recommended for implementation across every province, with planned some 704,000 beneficiaries. Some 55,000 opportunities were announced for Gauteng on 6th April with the launch of the Nasi Ispani Project, supported and jointly funded by the LAP across 24 sectors: Agriculture, Services, IT, Construction, Engineering, Wholesale and retail, safety and security, hospitality, social services, textile, transport, furniture manufacturing; education, energy, food and beverage, health and wellness, aviation, insurance, jewellery, hygiene, arts and culture, and financial sector. The partnering with the Gauteng provincial government seeks to ensure that government maximises the impact of its spending by pooling resources and eliminating duplication.

I also need to flag that the LAP projects have been – or still are to be - subject to meticulous quality assurance processes to ensure:

• they are compliant – with policy and legislation;
• all necessary controls are in place;
• there is capacity and necessary resources in place,
• and that these programmes produce real outcomes in terms of jobs and entrepreneurial prospects.

Labour activation programmes are not a silver bullet to end the challenge of unemployment, but they are a viable force-multiplier that can be used together with other initiatives and interventions as part of a response to mitigate unemployment. 

The sectors and industries that will contribute significantly to the creation of these opportunities include economically growing and in-demand sectors such as agriculture, ICT, construction, engineering, manufacturing, education, transport and mining. 

An initial amount of R15 billion has been budgeted for the expanded LAP roll-out, eventually rising to R23.8 billion funding permitting. Opportunities will run between 12 and 36 months. The money invested in the plan will be recouped by the UIF through contributions and revenue generated from investments, as has been in the past sustainability model of the Fund.

There is this saying that: “the proof is in the pudding.” The UIF has proven that it is capable of taking strategic measures when required – such as the Covid-TERS benefits – distributing R64 billion to 5 million laid off workers and their families during the pandemic – whilst remaining financially sound.

The official national launch of the expanded LAP programme takes place in KZN on 16th April with a progressive roll-out of projects province by province, district by district culminating in the Northern Cape on the 9th May to coincide with the Presidential Imbizo in Kimberly.

Details of other launches and the impact to be derived from these projects will be communicated on an ongoing basis. This demonstrates our serious commitment to creating opportunities for our people, and to embed these processes and programmes into the future.

*Thulas Nxesi is the Minister of Employment and Labour.*