The Congress of South African Trade Unions (COSATU) is disheartened that the country’s GDP has contracted by 0.3% in the third quarter compared to the second quarter.

COSATU was encouraged last quarter when GDP rose by 0.4% thinking it was a signal of better things to come. For a brief period, it appeared as if things were improving when expanded unemployment fell by 0.7% to 41.9%; inflation dropped to 2.8%, prompting the Reserve Bank to lower the repo rate by 25 basis points to 7.75%.

The optimism was short-lived as the agricultural sector slumped nearly 30% in the third quarter, due to drought which hampered the production of maize, soya beans, wheat, sunflower, fruit and vegetables. Transport services, vehicles sales, restaurants, fast food outlets and government spending also slowed down. Exports also fell by 0.4%.

Statistics SA said lower employment numbers in the civil service also contributed to the drop in economic growth. COSATU has consistently called on government to fill critical frontline vacancies in the public service to capacitate the state to deliver on its mandate and rebuild a local government that is sufficiently resourced and capacitated to provide quality public and municipal services the economy and working-class communities depend upon; and intensify the fight against crime and corruption.

The Federation has also urged government to expand the Presidential Employment Stimulus and other employment programmes to help young people enter the labour market.  We’ve been deeply dismayed by the massive cuts to this programme. Treasury has now opted to reduce the public service by 30 000 posts by offering early retirement packages. The Federation has cautioned against this fearing the loss of the critical skills base built over many years. However, if government insists on going ahead with this plan, COSATU believes it should hire 40 000 younger workers to replace those civil servants who would have opted for early retirement. 

Key to growing the economy is accelerating Eskom’s maintenance and generation investments to ensure loadshedding remains a thing of the past; ensuring that Transnet and Prasa are secured and fully modernised to enable commuters and products to reach their destinations on time.

Similarly, the work being done to remove the obstacles to economic growth and boost local procurement through the sectoral master plans must be boosted, including reviving the buy local campaign. The SRD Grant should be raised to the Food Poverty Level and its participants linked to skills and employment programmes.

COSATU once again calls on the government to turn its back on austerity and put resources into fixing the state and stimulating the economy.   The private sector too needs to come to the party and not simply abandon growing the economy to the state.  Businesses need to support locally produced goods, abandon retrenchments and invest in young people through artisan and intern programmes, ramp up investments in growth rich sectors, and the banks must make credit for SMMEs more accessible and affordable.

Issued by COSATU  

Zanele Sabela(COSATU National Spokesperson)
Mobile: 079 287 5788 / 077 600 6639
Email: zaneles@cosatu.org.za