COSATU statement on the rise in the price of fuel and paraffin

The massive projected increase in the price of fuel on Wednesday will be yet another painful further blow to an already battered economy and struggling working class.  We expect government to act decisively to intervene on behalf of workers and poor households. The increase of petrol by 75 cents, diesel by R1.60 cents and paraffin by R1.50 spells bad news for all South Africans and especially the working class. 

It may spur inflation which has been falling, and thus nudge an already excessive Reserve Bank to increase the repo rate once again.  Poor households are already struggling to survive under these difficult conditions and an increase in the price of paraffin will leave many poor families worse off. 

This increase in fuel prices creates a level of hardship for a society already suffering from high levels of unemployment and stagnant or declining real wages. Low and moderate income families are plunging further and further into debt because their wages are inadequate to afford the basic amenities.

The National Credit Regulator’s reports confirm workers are drowning in debt.  This coupled with electricity price, food prices and rising interest rates will make it even harder for workers to take care of their families.  It will push thousands to default on their loans and risk losing their homes, cars and other possessions.  The higher fuel prices drain the purchasing power of most South Africans and stifle economic recovery.

This will also threaten the sustainability of thousands of SMMEs and place their employees in danger of losing their meagre wages and being retrenched.

We are dismayed by government’s reluctance to release and act on the comprehensive review of the fuel price regime to reduce the taxes which constitute 28% of the fuel price regime.  This unfulfilled commitment was made by then Minister for Energy, Jeff Radebe in September 2019 and the current Ministers for Mineral Resources and Energy and Finance, Gwede Mantashe and Enoch Godongwana in April 2022. 

Whilst there is little that government can be do about the international oil price volatility, it can, as it did in 2022, provide relief to commuters and the economy by lowering fuel taxes.  This will have the additional benefit of reducing inflation and the insatiable temptation by the Reserve Bank to raise the repo rate and thus further impoverishing workers and suffocating the economy. 

The Ministry for Transport needs to be nudged out of its retirement zone and place the perpetually incompetent Road Accident Fund (RAF) under administration and retable the RAF and Road Accident Benefits Scheme Bills at Parliament.  These are key to fixing the anarchy at the RAF and reducing its dependency on above inflation increases for the Fuel Levy.  It is beyond shameful government pretends all is normal at the RAF.

COSATU expects government to adjust social grants in the Medium Term Budget Policy Statement, in particular the SRD Grant, to protect their recipients from to the impact of higher prices.

The Department of Transport and the Passenger Rail Authority of South Africa must speed up the reopening of the remaining Metro Rail lines still shut since the COVID-19 pandemic.  Government should also consider expanding subsidies for public transport and invest in our transport system. There is an urgent need to improve the quality and efficiency of public transport, particularly in poorer communities and rural areas. 

This unrestrained escalation in the cost of living will poison the upcoming wage negotiations and will automatically push our affiliates to demand above inflation salary adjustments for our members.

It is in the best interest of government to find a workable solution to this ever-present challenge. 

Issued by COSATU

For further comment please contact:
Matthew Parks
Acting National Spokesperson & Parliamentary Coordinator
Cell: 082 785 0687