COSATU statement on the latest GDP numbers
8 March 2017
The Congress of South African Trade Unions has noted the report that shows that South Africa’s economy ,as measured by the GDP, contracted by 0,3% in the fourth quarter of 2016. The mining industry’s 11, 5% was the main contributor to the economy’s slowdown, brought about by a fall in production of coal, gold and ‘other’ metal ores, such as platinum and iron ore. The Manufacturing sector contracted by 3,1% in the same quarter. This was largely a result of slower production in manufacturing sectors related to food and beverages, petroleum and chemicals, and transport equipment.
All industries in the tertiary sector recorded positive growth rates, led by an increase of 2,6% in transport and communication services and an increase of 2,1% in trade, catering and accommodation services. The federation has also noted that the South African economy grew by 0,3% in 2016 compared with 2015.The unadjusted real GDP increased by 0,7% year-on-year in the fourth quarter of 2016.
COSATU argues that the GDP figures are an indication of a paralysis in SA economic policy trajectory. This ignores the fact that economic growth is but one indicator of economic development and other indicators such as unemployment and income inequality are not accommodated in the final analysis. The NDP’s projection of anaverage annual GDP growth of 5.4% in order to reduce unemployment is unlikely to be realised and even if it were to be realised, it is clear now that the number of jobs would be few.
The focus on the services sector as the growth engine of the economy will ensure perpetual poverty and unemployment that will not be able to provide value added services, such as civil engineering and software engineering services.
The failure to protect SA agricultural industries from imports coming from the US and EU poses risk of job losses and food security. The agricultural sector has remained monopolised.
The contraction in the manufacturing sector in the third quarter shows that the benefits of SA’s integration into the global economy have not trickled down to the masses, in the form of jobs and more investment in the sector. This is a failure of industrial policy.
The failure of the mining sector also shows that the quest to transform the sector to process minerals locally has failed. The intervention by the government through the mining charter has not produced positive results. The mining sector has remained highly monopolised.
The focus of the government should be on addressing among others high unemployment rate by encouraging domestic demand and domestic production ,and not export of raw minerals and imports of food and manufactured goods.
According to the NDP, the low value added services sector and low wages will provide a solution to SA’s unemployment crisis such as the use of EPWP jobs. This is why we need to revisit both the Labour and Economic chapters of the NDP because; we do not believe they will help with goals of Radical Economic Transformation agenda . In order to industrialise and increase standard of living, the SA government should be investing more in the manufacturing sector.
One of the main reasons for lack of economic growth is labour flexibility ,which allows employers to retrench workers under the excuse of introducing technology and unhappy labour force, which is being deprived of its surplus value and the right to dignity. Prioritisation of the service sectors without a manufacturing growth plan points to the entrenchment of low wages and de-industrialisation.
COSATU calls for a moratorium on retrenchments and for government to convene a jobs summit in order to develop short and long term measures to stem the jobs bloodbath. Economic growth cannot be achieved at the cost of the workers and there is no shortcut to development.
Issued by Sizwe Pamla, National Spokesperson, COSATU, 8 March 2017
