‘Labour market reforms not the answer’

Davies has said.
Rather, should pursue competitive advantage through the beneficiation of primary products and the developmental financing, he said.

Mr Davies was speaking on the sidelines of the African National Congress’s national elective conference in Mangaung, at a Progress Business Forum breakfast on the progress made in industrial policy since 2007, the date of the ANC’s last elective conference in Polokwane.

Ultra-low wages in some emerging markets, coupled with the recent unrest in the agricultural sector in the Western Cape and the deaths of striking mineworkers in Marikana, should put paid to the idea of pursuing low wages as a key to driving exports, he said. Mr Davies added that the effect of the cost of energy in South Africa — in the past a key competitive advantage — could now only be expected to be “neutral to negative”.

The fragility of South Africa’s manufacturing sector was demonstrated by the number of jobs lost in the country directly linked to the 2008 global economic downturn — 200 000 out of one million lost overall. That was “more than proportional” given the size of the sector in relation to the South African economy, Mr Davies said.

Despite the slowdown of demand from key export markets, in the past five years progress had been made, such as the government’s support for the automotive and clothing sectors, he said.

Mr Davies said South Africa should therefore pursue the beneficiation of primary products — already a competitive advantage — and continue to consider tariff structures in trying to promoting or protecting sectors with potential.

The minister added that no country had enjoyed sustained industrial development without systematic developmental finance, referring to the success of Brazil’s state development bank.

Delivering the ANC’s political report to 4 500 delegates at Mangaung later on Sunday, President Jacob Zuma called South Africa’s industrial and trade policies “active and well resourced”.

Mr Zuma said due to a resolution on the economic transformation of state-owned enterprises and development finance institutions, taken at the Polokwane conference in 2007, a “reorientation” was taking place to place jobs at the centre of these enterprises and institutions’ mandates.

The Progressive Business Forum hosted Finance Minister Pravin Gordhan yesterday and will host Planning Minister Trevor Manuel today. — Business Day.