COSATU welcomes the Reserve Bank’s decision not to increase the repo rate

20 July 2023

The Congress of South African Trade Unions (COSATU) welcomes the South African Reserve Bank (SARB)’s decision not to inflict further pain on workers and the economy with another repo rate hike. This and yesterday’s announcement that inflation fell from 6.3% in May to 5.4% will provide some comfort to millions of working-class families struggling to survive each month.

The Federation appreciates the need to manage inflation and prevent it from spiralling out of control as it is workers and the poor who are the worst affected by inflation. However, the SARB has been excessively zealous by increasing the repo rate month after month by a combined 475 basis points over the past year and a half. Whilst this has helped to begin to tame inflation, it has come at a heavy cost to consumers and the economy and pickpocketed workers of their meagre salaries. There was space for the SARB to be less enthusiastic for such drastic measures at times.

Whilst the SARB needs to tone down its adventurism, government and in particular Treasury, Eskom, Transnet, PRASA and the Departments of Public Enterprises and Transport need to play their role in addressing the domestic aspects of the increase in inflation, namely the fuel and electricity price increases.

There is little government can do to resolve international oil price volatility, Treasury can reduce the 28% of the fuel price that goes towards taxes and the Road Accident Levy as it did in 2022. This would give immediate relief to commuters and businesses. Government needs to accelerate its plans to secure, rebuild and reopen all Transnet and PRASA railway lines to move goods and commuters off roads onto rail and thus cushion them from fuel price hikes. This would help lower food inflation in particular. The Department of Transport needs to be instructed to place the chaos masquerading as the Road Accident Fund (RAF) under administration and retable the RAF and Road Accident Benefits Scheme Bills at Parliament to ensure that the RAF’s ballooning liabilities of over R400 billion are brought under control and be less dependent on excessive fuel levy hikes.

We hope the R254 billion relief for Eskom will lessen its dependency on unaffordable double digit tariff hikes. More support needs to be given to Eskom by Treasury and the law enforcement organs to cleanse its supply chain and cost structures of the billions it loses annually to corruption, wasteful expenditure and criminality. Eskom needs to be allowed and supported to invest in its own renewable energy generation to help reduce its operating costs.

Government needs to ensure that the Special Relief Dispensation Grant (SRD) that has provided helpful relief to millions, be adjusted for inflation in the Medium-Term Budget Policy Statement due to be tabled at Parliament in October by the Minister for Finance. It is scandalous that it has not once been increased to protect its 8 million recipients from inflation since it was introduced in 2020, yet government has found funds to adjust the salaries of politicians. Government needs to do better by the poor and the working class.

Issued by Matthew Parks, Acting National Spokesperson & Parliamentary Coordinator, COSATU, 21 July 2021