Financial Mail - 17 February 2011
The R9bn jobs fund announced by President Jacob Zuma in his state of the nation address last week will invite competitive bids from projects with innovative ideas on how jobs can be created.
The fund will be run by national treasury, which proposed the idea to the cabinet lekgotla last month. It will operate on the basis of a competitive process, allocating funds to projects that show promise rather than on the usual budgeting principle of carving up funds among government departments.
It will look for innovation and ideas, say treasury officials, and will be open to experimenting with different approaches to find out what works. It will also look for co-funding from municipalities, donors and business.
With R9bn to give away over the next three years — R2bn in the first year — the challenge will be to get going quickly. What kind of projects are likely to secure support?
With the nation's attention focused on the problem of youth unemployment — more than 50% of people between the ages of 15 and 24 are unemployed — the idea of a wage subsidy for first-time workers, mooted by finance minister Pravin Gordhan a year ago, has been gaining currency in the ruling party. The fund could provide the opportunity for the subsidy idea, which was vehemently opposed by Cosatu, to be tested.
However, only one study on whether a wage subsidy would encourage employers to hire young workers has been initiated in SA. Though not a project of national treasury, the study by the African microe conomic research umbrella in the department of economics at Wits University is being keenly watched. First results are expected by mid year.
Proven examples of successful job creation schemes are more likely to get immediate attention. A prime example would be projects modelled along the lines of the community works project (CWP), a cost-effective form of government's expanded public works programme (EPWP) that over the past two years has been quietly piloted and has grown from 28000 participants in 2009 to more than 80000 in 2010.