Economic Trends & The Productive City

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4. Economic trends & the productive city

WELL-GOVERNED CITY

Key issue: Is the political & institutional context

stable, open and dynamic enough to accommodate

all interests

CITY POPULATION

Key issue: What will be the future size, form and

character of urban populations, given the

commitment that residents have to lives in the city?

INCLUSIVE CITY

Key issue: Do residents have the opportunities and

capacities to share equitably in the social benefits of city life?

SUSTAINABLE CITY

Key issue: How is the city impacting on the envelope of natural resources that sustains the settlement and makes it livable?

PRODUCTIVE CITY

Key issue: Can the local economy provide a

majority of residents with means to earn a

reasonable living?

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4. Economic trends & the productive cityPopulation growth and economic growth are closely linked

If cities cannot provide populations with opportunities to use their productive capacity, and be adequately remunerated for this, they may disinvest

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Population change 1996-2001

Empl

oym

ent

chan

ge 1

996-2

001

Key issues examined in report:• Economic value growth in

cities and key sectors• Employment & unemployment• Distribution of income• Key micro-economic factors

impacting econ development• Prospects for city economic

development strategies

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4. Economic trends & the productive cityGVA growth averaged 2,2% across 9 cities

between 96-01. And in some cities very strong growth

But GVA per capita growth did not keep pace

• Fastest growing for 96-01 was Tshwane. Continued in 01-02

• Some cities seeing recent slowdowns?

• Others (eg Msunduzi) a turnaround? -20.0

0%

-10.0

0%

0.0

0%

10.0

0%

20.0

0%

30.0

0%

40.0

0%

J ohannesburg

eThekwini

Cape Town

Ekurhuleni

Tshwane

NelsonMandela

Buffalo City

Mangaung

Msunduzi

TOTALCITIES

GVA per capita change '96 - '01 GVA change '96 - '01

Joburg eThekwniCape Town

Ekurhu-leni

TshwaneNelson

MandelaBuffalo

CityMangung Msunduzi

96-01

01-02

96-01

01-02

96-01

01-02

96-01

01-02

96-01

01-02

96-01

01-02

96-01

01-02

96-01

01-02

96-01

01-02

4.5 2.3 2.3 4.4 2.2 1.6 0.7 2.9 5.1 5.0 3.9 2.2 0.6 -1.1 1.1 0.5 -0.2 3.1

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2001-02 annual growth rates per sector shows differences across a sample of cities, although some, such as transport, storage and comms, uniformally strong

TSHWANECAPE

TOWNNELSON

MANDELAMSUNDUZI

TOTAL CITY 5.02% 1.65% 2.19% 3.07%

1 Agriculture, hunting, forestry, fish 3.78% 4.00% 3.94% 3.22%

2 Mining and quarrying -5.83% -8.49% -16.20% -16.18%

3 Manufacturing 5.29% 1.59% 1.32% 3.09%

4 Electricity, gas and water supply 2.43% 3.37% -0.82% 1.00%

5 Construction 3.59% -1.00% 0.24% 1.85%

6 Wholesale and retail trade 4.65% -0.03% 3.20% 3.76%

7 Transport, storage and comms 10.22% 4.58% 5.52% 6.56%

8 Finance, insurance, real estate & bus 5.69% 2.03% 2.64% 4.24%

9 Community, social and personal 1.11% 1.11% 1.11% 1.11%

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2001-02 annual sub-sector growth rates within manufacturing also show key differences

EKURHULENI ETHEKWNI MANGAUNGBUFFALO

CITY

MANUFACTURING 3.31% 4.43% -2.76% -3.46%

30 Food, beverages and tobacco products -4.85% -2.48% -8.61% -9.83%

31 Textiles, clothing and leather goods 6.20% 7.52% 1.92% 1.32%

32 Wood paper and printing 4.02% 5.15% -1.22% -2.69%

33 Fuel, petroleum, chemical and rubber 4.72% 7.45% 0.75% -0.73%

34 Other non-metallic mineral products 2.98% 4.34% -2.19% -2.60%

35 Metal products, machinery, appliances 5.86% 7.97% 1.30% 1.34%

36 Electrical machinery and apparatus 1.27% 4.02% -2.78% -3.89%

37 Electronic, sound/vision, medical & other 4.89% 7.17% 0.15% -1.15%

38 Transport equipment 0.29% 1.87% -4.31% -5.69%

39 Furniture and other items NEC & recycling 3.74% 6.53% -0.57% -2.09%

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Census data shows SA as a whole created a net 469 927 new jobs in 96-01. More than half of these – 247 672 – were formed in the nine SACN cities. But …

• Unemployed also grew 1 117 475. LFS shows expanded unemployment 35,72%

0%

5%

10

%

15

%

20

%

25

%

30

%

35

%

40

%

45

%

50

%

Nelson Mandela

Buffalo City

Msunduzi

Mangaung

Ekurhuleni

Thekwini

J oburg

Cape Town

Tshwane

Total of Nine Cities

Strict (official definition) Expanded definition

0

100000

200000

300000

400000

500000

600000

700000

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The strength of the local economies of the nine SACN cities needs to be seen in a long term perspective of economic restructuring

• Long term decline in manufacturing employment, especially in key centres

• Long term growth in employment in the finance / business sector 0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1970 1980 1991 1996 2001

Community & gov

Wholesale / retail trade

Construction

Financial & business

Electricity, gas, water

Manufacturing

Agriculture

Mining

Transport & comms

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However some surprising recent turnarounds

• Cities with a long term fall in manufacturing employment saw growth in this sector in 1996-2001

• Note especially the recent growth of manufacturing jobs in Johannesburg and Ekurhuleni

020000400006000080000

100000120000140000160000180000200000

J obu

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eThe

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Cape To

wn

Ekurhu

leni

Tshw

ane

Nelson

Man

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Buffalo

City

Man

gaun

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Msu

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i

Manufacturing 1996 Manufacturing 2001

020000400006000080000

100000120000140000160000180000200000

J obu

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Cape To

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Ekurhu

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Tshw

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Nelson

Man

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Buffalo

City

Man

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Msu

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Manufacturing 1970 Manufacturing 2001

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4. Economic trends & the productive cityJobs growth/decline in occupations follows trends in key sectors.

Worrying falls in professionals and pvt household employees

-200000

-100000

0

100000

200000

300000

400000

Cle

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GVA growth does not lead to the same increase in emplyment in all sectors

-6 -4 -2 0 2 4 6 8 10

Total city

1 Agriculture, hunting, forest

2 Mining and quarrying

3 Manufacturing

4 Electricity, gas and water supply

5 Construction

6 Wholesale and retail trade

7 Transport, storage & comms

8 Finance, insure, real estate & bus

9 Community, social & personal

GVA growth Emplyment growth

1996-2001GVA

growthEmploygrowth

Total city 4.52 2.32

1 Agriculture, hunting, forestry, fish 0.76 3.78

2 Mining and quarrying 3.87 -5.06

3 Manufacturing 3.60 2.27

4 Electricity, gas and water supply 4.20 0.25

5 Construction 2.77 0.73

6 Wholesale and retail trade 2.28 1.41

7 Transport, storage and comms 8.08 4.32

8 Finance, insurance, real estate & bus 7.35 2.95

9 Community, social and personal 0.28 1.11

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Incomes earned from employment still reflect the very serious racial imbalances of apartheid

• Larger numbers of black income earners earning near the lower income brackets

• Total earning power clearly skewed towards white earners

0

20000

40000

60000

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100000

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140000

No inco

me

R 1

- R 4

00

R 40

1 - R

800

R 80

1 - R

160

0

R 16

01 -

R 32

00

R 32

01 -

R 64

00

R 64

01 -

R 12

800

R 12

801

- R 2

5600

R 25

601

- R 5

1200

R 51

201

- R 1

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2401

- R

2048

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R 20

4801

or m

ore

Black African

Coloured

Indian or Asian

White

0

100000000

200000000

300000000

400000000

500000000

600000000

700000000

Black African

Coloured

Indian or Asian

White

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In some cities unemployment is so high, and average monthly income so low, relative to other parts of country, that it does not make economic sense to remain there

Average Monthly

Income per employed

person AMI:2001

Difference in AMI for each city

and National

AMI: 2001

Tshwane R 6483.81 R 2421.07

Ethekwini R 4226.88 R 164.13

Buff City R 3694.04 - R 368.70

Total R 5297.22 R 1234.47-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

Jobu

rg

eThe

kwin

i

Cap

eTow

n

Ekur

hule

ni

Tsh

wan

e

Nel

son

Man

dela

Buff

alo

City

Man

gaun

g

Msu

nduz

i

Tot

al o

fN

ine

Citie

s

Difference between city unemployment and national unemployment (1996)Difference between city unemployment and national unemployment (2001)

Difference between city unemployment and SACN cities unemployment (2001)Difference between city unemployment and national unemployment (LFS: Feb 2002)

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4. Economic trends & the productive cityVarious reasons for economic strength/weakness and

strategies to address

• The key reason for economic weakness is insufficient demand & inadequate use of productive capacity. But also micro-economic constraints

0

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60000

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100000

120000

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1994/9

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1995/9

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000

2000/0

1

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2

2002/0

3

Burglary non-residentialStock theft

Shoplifting

Theft of motorvehicle

Theft out ofmotor vehicleArson

Maliciousdamage to prop

Fraud

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• Some cities see global demand as answer & have set out to promote exports by addressing constraints on micro-economic competitiveness. As part of this are trying to address institutional inefficiencies, skills gap, etc

• Very NB that traditional LED not only focus. But will global economy provide stable & sustainable demand?

Joburg eThekw Ekurhul

Total number of applications in 2002/03 12 021 13 983 13 026

Av processing time (in days) minor building works 5 4 5

Av processing time (in days) for dwellings 10 20 15

Av processing time (in days) for industrial / comm 27 38 35

0

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100000

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Joburg

eThek

win

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Cap

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Tsh

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Man

del

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Buff

alo C

ity

Man

gau

ng

Msu

nduzi

Value industrial building plans passed ’02 (R '000)

Value commercial build plans passed ’02 (R '000)

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WELL-GOVERNED CITY

Key issue: Is the political & institutional context

stable, open and dynamic enough to accommodate

all interests

CITY POPULATION

Key issue: What will be the future size, form and

character of urban populations, given the

commitment that residents have to lives in the city?

INCLUSIVE CITY

Key issue: Do residents have the opportunities and

capacities to share equitably in the social benefits of city life?

SUSTAINABLE CITY

Key issue: How is the city impacting on the envelope of natural resources that sustains the settlement and makes it livable?

PRODUCTIVE CITY

Key issue: Can the local economy provide a

majority of residents with means to earn a

reasonable living?

Economic Trends & The Productive City

Real Estate

Transcript of Economic Trends & The Productive City