South Africa: The government will devise a strategy to rescue businesses in trouble
Posted by African Press International on February 11, 2009
Cape Town (South Africa)Jobs at risk from the global economic meltdown could not be saved if the companies at risk were not saved, President Kgalema Motlanthe said yesterday, giving the clearest sign yet that the government will devise a strategy to rescue businesses in trouble.
In an unprecedented move, Motlanthe held a free-ranging news conference, fielding questions on the content of Friday’s state of the nation address. In the past, the president has given an interview only to the national broadcaster.
Taking pains to stress that the task team of representatives of the government, business and labour was still working on the plan, Motlanthe said there would be no specific fund to bail out companies or sectors at risk, but the team would look at ways to save companies and jobs. The task team’s report was expected late this month or early next month.
Motlanthe said that if a company was lost, then clearly the jobs it offered would also be lost. There has already been a request from the motor vehicle industry for a R10bn package to save jobs and companies as domestic sales and international order books shrink.
In his state of the nation address, Motlanthe reassured the nation that the government had not been idle on the effects of the global economic crisis, and a task team was already in operation, considering options for mitigating the fallout. Among issues being looked at were maintaining the level of state spending in public infrastructure, longer leave, short time, and accessing development funds from pension funds.
Motlanthe said SA would not simply follow the US and the UK in dealing with the crisis by making large amounts available to bring liquidity back to the markets. As a developing country, SA would reposition itself to build infrastructure and keep people in their jobs so that the country could take advantage of the upswing when it came.
On the accessing of pension funds and concern expressed about putting retirement benefits of workers at risk, he pointed out that all pension funds were run by boards of trustees comprising half of employers and half of representatives of organised labour.
He said, however, that if a particular sector was at risk of going under, an “injection” could help it to survive, implying that a pension fund serving workers in a particular sector could approve such an injection in the interests of saving the sector and jobs.
Asked if his speech contained a warning that political parties’ election manifestos were unaffordable, he said he was merely saying that the full extent of the meltdown had not been quantified, and “when confronted by such uncertainty, it is better to be conservative and prudent”.
source.
Business Day (South Africa) – February 9, 2009.
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