The Congress of South African Trade Unions (COSATU) welcomes the decision of the South African Reserve Bank (SARB) to heed COSATU’s call to drop the repo rate by 25 basis points. This is the first reduction in the rate the central bank lends money to commercial banks in four years. The ultimate result is a drop in the interest rate banks charge their clients, bringing much needed relief to financially strained working-class households.

Workers and their families have felt the pain of the 475 basis points rise in the repo rate in the last two years. With a struggling economy, staggering levels of poverty and inequality, and three consecutive quarters of job losses, COSATU urges the SARB to cut the repo rate again in November, providing further critical breathing room to millions of workers who have been battling to make ends meet. Another rate cut later in the year will help stimulate the fragile economy.

In addition to the drop in inflation to 4.4%, there are several other reasons to be hopeful such as the projected more than R1 price decreases in petrol, diesel and paraffin in October, a stronger currency and improvement in consumer confidence.

Workers are also drawing some relief after withdrawing a portion of their retirement savings since the launch of the two-pot system on 1 September. COSATU encourages workers to use the money to pay off their debts and other financial emergencies.

The Federation is also calling on the government of national unity to revive the economy by providing extra support to Eskom, Transnet and Metro Rail as these entities are crucial for the optimal functioning of the economy, and in particular to end Eskom’s dependency on unaffordable double-digit tariff hikes. Government also needs to accelerate the review of the fuel price regime, reduce related taxes and zero rate key food items to provide relief to consumers, commuters and the economy.

Issued by COSATU

Zanele Sabela(COSATU National Spokesperson)

Mobile: 079 287 5788 / 077 600 6639

Email: zanele@cosatu.org.za