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South Africa: Should South African Taxpayers Subsidise Car-Making Robots?

If job creation is South Africa's major social and economic priority, the country should be investing in people rather than in robots that populate the country's highly-automated automotive manufacturing sector, according to local economists. South Africa ImmigrationSouth Africa's automotive manufacturing sector is the country's flagship industrial support sector, with about two billion dollars having been pumped into it through a series of subsidy schemes. However, as the industry is capital intensive, some commentators are worried that the South African government has been assisting a sector that does not do enough for job creation. "If we look at the big picture, there are other industries which would do more for job creation than the automotive sector - such as textiles, agriculture, food processing, furniture making and tourism," independent economist Mike Schussler, chief executive officer of the consultancy economists.co.za, told IPS. Aid has traditionally been channeled through the long-established Motor Industry Development Programme, which was updated and re-branded as the Automotive Production Development Programme (APDP) in 2013. "The capital requirements of the motor industry are very high, and so we need to give a lot of subsidies to attract investment. It is a problem when you have an industry where you employ assembly-line robots, not people," Schussler said. He explained that while automotive workers often need to be highly skilled and trained, there are other industries where a less sophisticated workforce is needed. "We can create jobs more cheaply, and in rural areas where they are really needed, in sectors such as tourism," he said. While trade and investment consultant Duane Newman of Cova Advisory told IPS that it was important for South Africa to have a globally respected automotive sector, and that the government was right to retain a support scheme for the industry, he said it could be argued that the industry was given more support than it should be. He said support for the industry was around two billion dollars a year - about 20 percent of the support the South African government gives to all local industries. "Clearly, the automotive sector does not account for 20 percent of the GDP of South Africa - it's nearer to six percent - so it could be argued that the industry is being given three times the support it should receive. Source: http://allafrica.com/stories/201304170905.html

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