S.Africa's Zuma to focus on cutting unemployment

South African President Jacob Zuma will use a major policy speech on Thursday to lay out his plans to create jobs in the regional economic power where unemployment has lingered at about 25 percent for years.

Zuma, in his State of the Nation Address, is also expected to touch on his concerns about the rand currency, which is hurting exporters as it hovers near three year highs, and an education system ranked among the worst in the world.

But analysts do not expect the speech to result in any major changes to Africa's largest economy, especially after Zuma has spent his nearly two years in office placing a higher priority on the internal politics of his ruling African National Congress than pushing through new policies.

Senior ANC officials have said this year is about jobs, jobs and more jobs and expect Zuma in the speech to flesh out a plan to create a 10 billion rand fund to reduce unemployment in a country where more than half of the employable youth under 24 are jobless.

High levels of joblessness are attributed in large part to a rigid labour market where laws make it costly for employers to hire and fire workers.

While the job fund may slightly ease unemployment, economists said real changes can only come by making the labour market more flexible, easing rules on hiring temporary workers.

But that would put him at odds with the powerful labour federation COSATU, in a governing alliance with the ANC and whose support Zuma needs as his party heads into municipal elections in the first half of this year.

MAJOR CONCESSIONS

Whatever he says will be very guarded, very calculated so when COSATU or anyone else picks through the text they will see what they want and the possibility for change but nothing they can hold against Zuma, political analyst Nic Borain said.

Zuma made major concessions to COSATU, which can use its 2 million members as a powerful vote gathering machine for the ANC, in four labour bills before parliament that are aimed at forcing employers to give permanent jobs to temporary workers.

But a government-commissioned assessment said the bills would add to unemployment by increasing costs and red tape for employers while industry wants to see them scrapped altogether.

Zuma will likely address investors' concerns about rumblings in the ANC over the nationalisation of mines by reiterating it is not government policy to take over private mining firms in the world's largest producer of platinum.

Zuma has mostly had a hands off policy when it comes to the rand and interest rates, giving the central bank and Treasury sweeping control of monetary policy.

With municipal elections in the coming months, Zuma is expected to appeal to the country's poor to vote for the ANC despite the slow pace of the government's delivery of improved infrastructure for the impoverished.

The ANC has faced violent protest for failing to deliver running water, electricity, basic education and healthcare to the masses of poor in the 17 years the party has been in power since the end of apartheid.

Given its stranglehold in politics, the ANC will easily win the bulk of the local elections but any gains by the opposition Democratic Alliance could deal a blow to Zuma and his backers in the highly splintered ruling group.