The Centre for Development and Enterprise (CDE) is pushing for public and private sector buy-in for an export processing zone it says can address unemployment in the country.
According to Ann Bernstein, CEO of the CDE, a lot can be achieved if South Africa expands its share of global manufacture.
“South Africa needs a strategy for rapid and much more inclusive growth if it wants to see employment growth,” she said at a recent seminar in Cape Town. “It is vital that we think differently about the economy and how we are going to include everyone and achieve the goals we need to. Not only do we need firms in all shapes and sizes, but we need competitive export companies.”
But, she said, it was imperative that the country embarked on a different conversation about what was required to achieve growth and how it was going to do it. The CDE has proposed an export-processing zone for the Nelson Mandela Bay Metro that serves as an example of how this growth can be achieved differently.
“The EPZ will provide a competitive location for labour-intensive manufacturing activities, allowing firms located within the zone several benefits – including duty-free imports and rapid customs and export clearance formalities,” she said. “Subject to certain basic safeguards on employment practices – such as working conditions and plant safety – the EPZ will also ensure firms are free to negotiate wages and working hours in-house with their employees.”
This included expanding or contracting their workforce as market demand and conditions changed. According to Bernstein this would allow companies within the EPZ to attract labour at wages of around R78 per day or around R1700 per month. This is much lower than the proposed R20 per hour proposed in the newly gazetted National Minimum Wage Bill recently.
According to Bernstein a different approach is required if jobs are to be created.
“The most sustainable expandable job-generating projects are called firms (companies),” she said. “We need to be thinking how we can get these firms to create jobs rather than attacking the firms we currently have.”
She said the only restrictions on companies in the CDE-proposed EPZ was that production had to be solely for exports and it was only for new companies or activities. Any firms with operations in South Africa will not be permitted to move any existing operations to the EPZ.”
She said the decision to use Nelson Mandela Bay was because it was a good place to experiment. Not only did the metro have high unemployment rates, but also two under-utilised ports. Bernstein said while many were opposed to the EPZ proposal the reality was that South Africa needed to adopt a new and more labour-intensive growth path or millions of people would remain unemployed.
“A low wage is better than no wage,” she said. Attendees at the summit questioned the necessity for a new EPZ proposal with some saying South Africa had very good legislation around industrial zones that could easily be adapted to include some of the CDE suggestions.
But, said Bernstein, it was about making South Africa competitive with other low-wage countries like Cambodia where the minimum wage was only around R2000 per month. She said the project proposal was slowly gaining political traction and had been submitted to Parliament to review the legislation involved and to start setting the scene for the proposal to be put into action.
