The Congress of South African Trade Unions (COSATU) urges the South African Reserve Bank (SARB) to provide workers and the economy with badly needed relief with a repo rate cut of at least 50 basis points when its Monetary Policy Committee meets on Thursday.

The National Credit Regulator reports on household debt paints a terrifying picture of the working and middle classes drowning in debt.  This crisis has been made worse with the 475 basis points hikes since the war in Ukraine started three years ago and international oil prices skyrocketed. 

Increases to the repo rate have made life unbearable for millions of poorly paid workers struggling to buy the essential goods of life and provide for their families.  Whilst there have been some repo rate cuts since then, they have been too far and few to make a meaningful dent. 

Pegging the repo rate at excessive levels inflicts unnecessary pain upon workers, especially when the key factors in South Africa’s inflation are administered prices not consumer driven, e.g. the fuel price driven by international oil fluctuations and Eskom’s unsustainable dependence upon double digit tariff hikes to compensate for its massive financial leakages, in particular the millions who do not pay for electricity consumed.

A repo rate cut of at least 50 basis points will reduce the debt burden upon millions of workers, enable them to spend money stimulating economic growth and thus sustaining and creating jobs.  As we head towards the festive season when the retail and hospitality sectors seek to cover their costs and where millions of workers are employed, the economy needs an injection of stimulus to weather a difficult year for the nation.

With inflation consistently falling and currently at 3.6% there is plenty of space to provide relief to the nation after a long year.  We hope SARB will err on the side of workers, the unemployed and an economy in desperate need of growth.  It will be an abomination if SARB with the proposed new inflation target of 3% and a 1% margin decides against providing some TLC to an exhausted nation and a fragile economy. 

COSATU will continue to engage with the leadership of SARB on the need to cushion workers, stimulate the economy and create jobs whilst managing inflation.

Issued by COSATU

Matthew Parks (COSATU Parliamentary Coordinator)

Mobile: 082 785 0687

Email: matthew@cosatu.org.za