The suitability of South Africa’s industrial policy to promote employment in the manufacturing sector

Abstract

Despite targeted support through the industrial policy, South Africa’s manufacturing sector has been stagnant, failing to achieve the targeted objective of labour-absorbing growth and job creation. The contribution of the manufacturing sector is on a decline, questioning whether the adopted intervention aligns with the local context. The study aims to establish why the manufacturing sector has struggled to achieve labour-absorbing growth under the current industrial policy. To respond to the research question, the study focuses on the implementation of industrial policy instruments, namely incentives, public procurement, trade policy, and skills development. The research aims to contribute to the existing literature on the implementation of industrial policy in South Africa. To achieve the research objectives, the research adopted a qualitative research strategy and document analysis as the primary data collection tool. To assess the impact of the intervention on the performance of the sector, the research collected quantitative data through analysis of the sector's contribution to the GDP and overall employment. The study finds that despite the industrial policy and New Growth Path policy emphasising the role of labour-intensive industries to promote growth and create employment, the implementation of the policy is biased towards capital-intensive industries. The research also finds that implementation of industrial policy interventions is a challenge due to the capacity of implementing agencies and that skills upgrading is not emphasised in the industrial policy.