COSATU is appalled by the Reserve Bank’s decision to further impoverish workers with yet another misguided repo rate hike
27 January 2023
The Congress of South African Trade Unions (COSATU) is appalled by the South African Reserve Bank’s callous decision to further impoverish workers with yet another repo rate hike. A cursory reading of the National Credit Regulator’s reports attests to the fact that workers are drowning in debt. This will make it even harder for them to continue to pay their loans and put them at risk of losing their homes, cars, and other possessions that they were earned over many years.
This will make it even more difficult for workers to feed their families and threaten the sustainability of thousands of SMMEs. Workers will likely lose jobs or face wage stagnation.
The central cause of South Africa’s inflation spike is the war in Ukraine and the subsequent manipulation of international oil prices by a few opulent petroleum regimes at the expense of the rest of the world and in particular developing nations. CPI is likely to be put under further pressure from the 1st of April when NERSA’s ill-considered decision to grant Eskom an 18.65% increase may come into effect.
Workers, consumers, SMMEs and the economy are still struggling to recover from Covid-19, a deep economic recession, a 43% unemployment rate, and a cumulative 250 basis points hike in the repo rate since 2021. They cannot afford to continue to indulge the SARB’s fetish with ghastly repo rate hikes month after month. The government needs to address those issues within its ambit to fix this crisis and alleviate the pressure on workers and the economy.
Key interventions need to include:
A halt on further repo rate hikes by the SARB.
A shift in attitudes by the commercial banks which perversely impose the highest rates on those who can least afford them.
A reduction in the fuel tax regime to reduce record petrol prices by Treasury.
The Department of Transport re-tabling the Road Accident Fund and Road Accident Benefits Scheme Bills at Parliament and appointing a competent administrator to address the never-ending systemic chaos at the Road Accident Fund causing its dependency on excessive fuel levy hikes.
Treasury reducing Eskom’s debt by two thirds in the 2023/24 Budget due to be tabled in Parliament in February as well as comprehensive support by key government institutions to address Eskom’s fiscal balance sheet and the billions it loses annually to corruption, wasteful expenditure, outstanding debt owed to it by municipalities and consumers as these will lessen the need for Eskom to impose unaffordable double digit hikes year after year.
Heeding the President’s call for a suspension and review of Eskom’s debilitating 18.65% and 12% increases for 2023 and 2024. This needs to be accompanied by government providing a comprehensive package of support measures to address Eskom’s excessive operating costs and leakages.
Enhancing the Special Dispensation Relief (SRD) Grant that has provided a lifeline for 10 million unemployed persons and to increase it to the food poverty line.
Tax holidays and a move towards a more progressive tax regime for financially struggling SMMEs that incentivises them saving and creating jobs.
A stimulus package to spur economic growth from the state, the public and commercial banking, and financial institutions.
If we are to reduce inflation and prevent it from further depleting workers’ meagre wages, then government needs to address the fundamental crises fuelling it and crippling the economy. Workers cannot afford for government to continue taking a hands-off approach, nor can workers afford to continue to be pickpocketed by an overzealous Reserve Bank.
Issued by Size Pamla, National Spokesperson, COSATU, 27 January 2023
