ECONOMIC GROWTH THROUGH SKILLS

DEVELOPMENT – A SOCIO-ECONOMIC PERSPECTIVE

Premier’s Dialogue with SETAs & NSA Consultative Workshop2 May 2013

1 of 20

POINT OF DEPARTURE

• Economic growth is important to address socio-economic challenges– Interrelationship between factors!

• Education and skills are key elements in achieving economic growth– Scarcity of skills data on sub-national level!

• Primary source of information – StatsSA– Census 2011, GDP & QLFS

2 of 20

ECONOMIC GROWTH IMPERATIVE

“We need [economic] growth rates in excess of 5%...” President JG Zuma, 14 Feb 2013 (SONA)

“We have to work hard and grow the provincial economy at a rate of between 5% and 7% per

annum...” Premier DD Mabuza, 1 March 2013 (SOPA)

“...the rate of economic growth needs to exceed 5% a year on average.”

National Development Plan

3 of 20

SOCIO-ECONOMIC CHALLENGES OF MPUMALANGA

Socio-economi

c challeng

es

High HIV prevalence

Educational challenges

High unemploym

ent

Low HDI

High inequality

High poverty

Household services

challenges

Low economic growth

Sectoral dependency

Unequal economic

distribution

High inflation

MEGDP central

challenges

1. Reduce unemployme

nt

2. Reduce poverty

3. Reduce inequality

4 of 20

IMPERATIVE – ACCELERATE ECONOMIC GROWTH

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-5%

0%

5%

10% Historic and forecasted GDP growth by region, 1996-2016

World Emerging & developing South Africa MpumalangaYear

Ann

ual G

DP

grow

th

• Growth target – average GDP growth minimum 5% per annum

Forecasted growth

5 of 20

LINKING ECONOMIC GROWTH & EMPLOYMENT GROWTH

0%

1%

2%

3%

4%

5%

6%

7%

8%

Real GVA growth 2001-2011

Ann

ual a

vera

ge g

row

th r

ate

High growth in-dus-tries

62.2%

Medium

growth in-dus-tries

27.0%

Low growth industries

10.8%

Contribution to employment changes 2001-2011

High

Medium

Low

6 of 20

CHALLENGE – REDUCE UNEMPLOYMENT

LP KZN NW GP WC RSA NC MP EC FS0%

5%

10%

15%

20%

25%

30%

35%

Comparative strict unemployment rate per region, Q4 2011 – Q4 2012

Region

Une

mpl

oym

ent

rate

7 of 20

CHALLENGE – REDUCE UNEMPLOYMENT

• 399 000 unemployed at the end of Q4 2012– Youth (15-34 yr) = 72.7% of unemployed

• Specific unemployment rates:– Male = 24.9%– Female = 34.8%– Youth (15-34 yr) = 40.3%

• Additional 226 000 discouraged job seekers• Target to reduce unemployment to 15% by

2020 (MEGDP) and 6% by 2030 (NDP)

8 of 20

CHALLENGE – REDUCE POVERTY

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0%10%20%30%40%50%60%

40.6% 37.7%

45.4%41.6%

Comparative % of population in poverty in SA & Mpumalanga, 1996-2011

South Africa Mpumalanga

Year

% o

f pop

ulat

ion

9 of 20

CHALLENGE – REDUCE POVERTY

• In 2011, 1.59 million citizens of Mpumalanga lived in households with an income less than the poverty income (MLL)– e.g. R2 658 household of 4 & R3 695

household of 6• Target to reduce % of people in

poverty to 0% by 2030 (NDP)

10 of 20

CHALLENGE – REDUCE INCOME INEQUALITY

• National Gini-coefficient 0.63 in 2011 – increased from 0.62 in 1996

• Mpumalanga Gini-coefficient 0.62 in 2011 – increased from 0.60 in 1996 & therefore income distribution was more unequal in 2011 than it was in 1996

• In 2011, the wealthiest 20% of the population earned 68.2% of income & the poorest 40% only 8.1%

11 of 20

CHALLENGE – REDUCE INCOME INEQUALITY

1996 20110%

10%20%30%40%50%60%70%80%90%

100%

8.2% 8.1%

65.5% 68.2%

Comparative shares of income in Mpumalanga, 1996-2011

Wealthiest 20%40-80%Poorest 40%

% o

f inc

ome

NDP target = poorest

40% to earn 10% of

income by 2030

12 of 20

IMPROVE EDUCATION OUTCOMES

No school-ing

Some primary

Completed primary

Some secondary

Matric Higher0%

10%

20%

30%

40%

30.3

%

14.6

%

6.5%

28.1

%

14.9

%

5.5%

14.1

%

11.7

%

4.2%

31.4

%

29.0

%

9.7%

Highest level of education (age 20+) in Mpumalanga, 1996-2011

1996 2001 2011

Level of schooling

Perc

enta

ge o

f po

pula

tion

20+

13 of 20

IMPROVE EDUCATION OUTCOMES TO IMPROVE INCOME

Education Income0%

10%20%30%40%50%60%70%80%90%

100%

29.0%

30.8%

9.7%

45.2%

Comparative contribution to education and income, 2011

HigherMatricSome secondaryCompleted primarySome primaryNo schooling

% c

ontr

ibut

ion

14 of 20

IMPROVE EDUCATION OUTCOMES TO IMPROVE

EMPLOYABILITYStrict unemployment rate by specific levels of educationLevel of education Unemployment rate

Matric completed 31.6%Matric & certificate completed 20.6%

Matric & diploma completed 9.4%

Matric & degree+ completed 4.1%• 20.1% of 2012 matriculants obtained admission to higher

certificate studies• 29.8% of 2012 matriculants obtained admission to diploma

studies• 19.8% of matriculants obtained admission to bachelor studies

15 of 20

IMPROVE EDUCATION OUTCOMES – TARGET GROUPS

Employed Unemployed0%

20%

40%

60%

80%

100%

Education levels of Economically Active Population, Q4 2012

% c

ontr

ibut

ion

16 of 20

IMPROVE EDUCATION OUTCOMES – TARGET

INDUSTRIES

Agriculture Mining Manufacturing Utilities Construction0%

20%

40%

60%

80%

100%

Education levels of employed according to industry, Q4 2012

% c

ontr

ibut

ion

17 of 20

IMPROVE EDUCATION OUTCOMES – TARGET

INDUSTRIES

Trade

, cater

ing & ac

commod

ation

Transp

ort & co

mmunica

tion

Finan

ce & bu

siness

servi

ces

Commun

ity se

rvices

0%20%40%60%80%

100%

Education levels of employed according to industry, Q4 2012

% c

ontr

ibut

ion

18 of 20

IMPROVE EDUCATION LEVELS – TARGET AREAS

Employed Unemployed0%

20%

40%

60%

80%

100%

Geographic distribution of Economically Active Popu-lation with some secondary schooling & matric, Q4

2012

% c

ontr

ibut

ion

19 of 20

CONCLUSION• To achieve higher economic growth:

─ The country has to develop the capabilities of the workforce on a broad scale so that we can grow faster

• To reduce unemployment:─ In order to raise employment, South Africa

[Mpumalanga] needs better educational outcomes• To reduce poverty:– Eliminate poverty by....building capabilities

• To reduce inequality:─ Skills constraints push up the premium for skilled

labour, inducing large difference in salaries of skilled & unskilled people, raising levels of inequality

20 of 20