Staff Reporter
The Free State economy is expected to contract by over nine percent this year as the devastating effects of the COVID-19 pandemic continue to set in, Finance MEC Gadija Brown has said.
Presenting the provincial supplementary budget Tuesday, Gadija said the impact of the coronavirus outbreak on the local economy is anticipated to be severe.
“Our provincial economy is projected to contract by 9.1 percent in 2020,” she said.
“The impact of this will be detrimental on our people, particularly in our endeavour to fight and combat the triple challenges of poverty, unemployment and inequality.”
The MEC said while the provincial economy is projected to recover to 2.2 percent in 2021, there are fears the present economic downturn could have a long-term effect on the economy, already dogged by a high unemployment rate which presently stands at 38.4 percent.
“Our province has the second highest rate of unemployment in the country, behind Eastern Cape,” she lamented.
“The youth, aged 15 to 34 years, are the most vulnerable with an official unemployment rate of 52.2 per cent.”
Brown said the structural causes of unemployment in South Africa are numerous and multifaceted, reflecting skills-mismatch between the workforce and industry demand, a subdued economic environment and high inequality.
“Changes in the sectoral composition of employment within the province towards a more capital- and skill-intensive economy has meant that fewer and new low-skilled jobs are becoming available,” she said.
Brown suggested that the job creation efforts started at the beginning of this year such as the Presidential Youth Employment Intervention and existing ones such as the Expanded Public Works Programme and Community Works Programme should be scaled up.
“The job-creation initiatives and programmes within the private sector that began before coronavirus must resume, and new ones should be designed and implemented with unprecedented urgency,” the MEC said.