The South African Federation of Trade Unions (SAFTU) notes the Cabinet’s approval of the revised Industrial Development Strategy (IDS), which seeks to arrest industrial
decline and rebuild productive capacity through a focus on decarbonisation,
digitalisation and diversification.
For many years, SAFTU has warned that South Africa faces a deepening crisis of
deindustrialisation, mass unemployment, factory closures, and collapsing state capacity and growing dependence on imported manufactured goods. The new strategy represents an important admission by the government that the current economic trajectory is unsustainable.
The reality confronting the country is stark. Statistics South Africa’s first-quarter 2026 labour force survey revealed that the official unemployment rate increased to 32.7%, while the expanded unemployment rate rose to 43.7%, among the highest levels in the world. Employment declined by 345,000 jobs in a single quarter while the number of unemployed increased by301,000. Young workers accounted for approximately 258,000 of the jobs lost.
The recently released GDP figures show growth of only 0.5% in the first quarter of
2026 confirms once again that South Africa remains trapped in a low-growth, high-
unemployment crisis. Growth at this level is incapable of addressing unemployment, poverty, and inequality.Manufacturing’s contribution to GDP has declined dramatically over the democratic period. The crisis continues to deepen.
Recent employment statistics show that manufacturing lost approximately 61,000
jobs during the final quarter of 2025 and approximately 127,000 jobs over the year.
These losses form part of a long-term process of deindustrialisation that has
weakened steel production, engineering, metal fabrication, foundries, textiles,
clothing, agro-processing, and numerous other productive sectors.
Entire industrial towns have been hollowed out.Communities that once depended on productive industries have been reduced to centres of unemployment, poverty, migration, crime, and social despair.
In this context, SAFTU welcomes several aspects of the Industrial Development
Strategy.
These include:
- Recognition of the crisis of industrial decline and deindustrialisation;
- The commitment to beneficiation and value addition within South Africa, rather than
exporting raw materials; - The emphasis on rebuilding productive sectors such as steel, manufacturing,
mining, agro-processing, and the digital economy; - Recognition of the importance of infrastructure investment, including energy, rail,
ports and logistics; - Commitments to localisation and the development of domestic productive capacity;
- Recognition that industrial development remains essential for employment creation
and economic transformation.
These elements overlap significantly with the demands that SAFTU has consistently
advanced through NEDLAC, Parliament, public campaigns, Section 77 processes,
budget submissions and economic policy interventions.
THE CRITICAL QUESTION: WHAT MAKES THIS DIFFERENT FROM PREVIOUS
INDUSTRIAL STRATEGIES?
While welcoming these commitments, SAFTU believes the central question facing
the country is whether this strategy represents a genuine break with the failures of
previous industrial policy frameworks.
South Africa has not lacked industrial policies.
Over the past two decades, the government has introduced the Industrial Policy Action Plans (IPAPs), theNew Growth Path, localisation programmes, industrial incentives schemes, sector master plans, and numerous industrial support initiatives.
Yet despite these interventions: - Manufacturing employment continued to decline;
- Industrial capacity weakened;
- Factory closures accelerated;
- Import penetration increased;
- State-owned enterprises deteriorated;
- Infrastructure collapsed;
- Unemployment deepened;
- Economic growth stagnated.
The challenge, therefore, is not the absence of industrial policy documents.
The challenge is confronting the contradictions that have repeatedly undermined
industrial development.
CONTRADICTION ONE: INDUSTRIALISATION CANNOT COEXIST WITH
AUSTERITY
The government cannot simultaneously pursue industrialisation and austerity.
For more than a decade, the Treasury’s fiscal consolidation programme has
systematically weakened the institutions required to drive industrial development.
Industrial policy requires a capable developmental state.
It requires engineers, inspectors, planners, scientists, researchers, educators,
municipal workers, logistics specialists, and public-sector professionals.
Yet austerity has frozen vacancies, weakened municipalities, and reduced infrastructure spending, undermined education and training institutions, and hollowed out implementation capacity. The country cannot cut its way to industrialisation.
CONTRADICTION TWO: SOUTH AFRICA IS EXPERIENCING AN INVESTMENT
STRIKE
South Africa’s investment levels remain far below those achieved by successful
industrialising economies. Both public and private investments remain inadequate to support industrialexpansion, employment creation, and infrastructure development.
Treasury’s austerity policies have constrained public investment while large sections
of private capital have preferred financial speculation, dividend extraction, capital
flight and short-term shareholder return rather than productive investment.
The result is economic stagnation, weak growth, and persistent mass unemployment.
The 0.5% GDP growth recorded in the first quarter of 2026 is the predictable
outcome of this prolonged investment drought.
CONTRADICTION THREE: SOUTH AFRICA ALREADY HAS SIGNIFICANT IDLE
INDUSTRIAL CAPACITY
One of the clearest indicators of the industrial crisis is the underutilisation of
productive capacity. Manufacturing capacity utilisationremains at approximately 76.9%, meaning that nearly one-quarter of South Africa’s productive manufacturing capacity stands idle. South Africa’s problem is therefore not simply a shortage of industrial assets.
The country already possesses substantial productive capacity that is not being fully
utilised. Steel-making facilities have been mothballed.
Foundries have closed.
Textile and clothing factories have disappeared.
Engineering workshops operate below capacity.
Manufacturing firms continue to reduce shifts and output.
Industrial policy must therefore focus not only on creating new industries but also on
reviving, modernising, and fully utilising productive assets that already exist.
The tragedy of South Africa’s economy is that mass unemployment, infrastructure
backlogs and idle industrial capacity coexist simultaneously.
Millions need jobs.
Communities need housing, rail infrastructure, water systems, energy projects, and
public services. Yet productive capacity stands idle.
This contradiction reflects not a shortage of resources but a failure of the economic
policy.
CONTRADICTION FOUR: RELIANCE ON MARKET-LED DEVELOPMENT HAS
FAILED
The strategy continues to rely heavily on private investment as the principal driver of
industrialisation. South Africa’s experience over the past three decades demonstrates the limitations of this approach. Private capital has overwhelmingly favouredfinancial speculation, monopoly pricing, capital flight, dividend extraction, and raw material exports rather than the productive investment required for industrial transformation. The country, therefore, requires a far stronger developmental state capable of directing investment into strategic sectors.
CONTRADICTION FIVE: INDUSTRIAL POLICY WITHOUT JOB TARGETS IS
INCOMPLETE
Industrial policy cannot be measured solely through investment commitments or
export earnings. Its success must be measured through decent jobs created, reductions in unemployment, skills development, improved wages and working conditions,and reductions in inequality. Any company receiving state incentives, tax benefits, localisation support,procurement advantages, or developmental finance should be required to meet binding targets relating to employment, training, localisation, and decent work.
PUBLIC OWNERSHIP AND THE RENATIONALISATION OF STRATEGIC
INDUSTRIES
SAFTU reiterates its long-standing call for the renationalisation of strategic industrial
assets, particularly ArcelorMittal South Africa, the successor to the former ISCOR,
and Sasol. These enterprises were established through decades of public investment and state support. They were never intended merely to maximise shareholder returns.
Their purpose was to provide the industrial foundation required for economic
development, industrialisation, localisation, infrastructure expansion, and employment creation.Steel and petrochemicals are strategic inputs into virtually every sector of the economy.
The crisis facing ArcelorMittal South Africa demonstrates the irrationality of the
current model. While South Africa requires enormous quantities of steel for infrastructure development, productive steel-making capacity continues to be threatened, mothballed, or scaled down.
The country simultaneously faces mass unemployment, collapsing infrastructure, and idle industrial capacity.Strategic productive assets should not be abandoned because they no longer satisfy short-term shareholder expectations.
The same applies to Sasol.
As South Africa embarks on a just transition and seeks to develop new industrial
sectors, petrochemicals, synthetic fuels, green chemicals, and industrial feedstocks
will remain strategically important. Democratic public ownership would allow these sectors to be aligned with national development goals, industrial policy objectives, localisation requirements, downstream manufacturing,and employment creation.
No successful industrial economy has developed without maintaining strategic
influence over key sectors of production.
South Africa should be no exception.
SAFTU welcomes the government’s recognition that South Africa requires a renewed industrial strategy.However, industrial policy will fail if it remains trapped within the same neoliberal macroeconomic framework that contributed to the current crisis.
The Government cannot pursue industrialisation while implementing austerity.
It cannot call for localisation while permitting deindustrialisation.
It cannot promote beneficiation while continuing to export raw minerals.
It cannot call for industrial expansion while tolerating an investment strike.
It cannot speak of industrial renewal while allowing strategic productive assets to
stand idle.
South Africa’s challenge is not simply to build new industrial capacity.
It is to rescue, modernise, and fully utilise the productive capacity that already exists.
South Africa needs a bold, worker-centred industrial strategy that places decent
work, economic sovereignty, beneficiation, localisation, public investment,
democratic ownership, and social justice at its centre.
The question is no longer whether South Africa needs an industrial policy.
The real question is whether the government is prepared to make the fundamental policy choices necessary to ensure that industrialisation serves workers, communities, and the people rather than simply creating new opportunities for capital accumulation.
A statement was issued on behalf of SAFTU by the General Secretary, Zwelinzima Vavi.
For media inquiries, contact the National Spokesperson at
Newton Masuku
Newton@saftu.org.za
0661682157
Media Officer
Asive Dyani
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