The Congress of South African Trade Unions (COSATU) welcomes the South African Reserve Bank’s sober decision not to increase the repo rate despite inflationary pressures due to the pending fuel price hikes.
The Federation urges swift action by government to cushion society from the massive fuel price hikes due to come into effect on 1 April of nearly R6 per litre of petrol and R10 per litre of diesel. These hikes are due solely to the ongoing war in the Middle East and the havoc it has caused to international oil and gas supplies and prices.
The devastating impact these unprecedented price hikes will have upon the working class and the economy cannot be overstated, it will be a bloodbath. Projected economic growth for 2026 of an already weak 1.4%, will be gone. Businesses will not manage a 50% hike in diesel prices. Many will retrench workers in large numbers. Painstaking gains reducing unemployment over the past five years may be lost.
Workers already drowning in debt and supporting about seven relatives each will simply not cope. Most workers already spend an average of 40% of their salaries on transport. This will now jump to 50% to 60%. Workers will now have to choose between feeding their children and travelling to work and school.
Whilst appreciating the state’s fiscal pressures, it must move quickly to cushion society, in particular the working class, and the economy from the spillover of the latest war in the Middle East. The fundamental solution to this global crisis is for the war to immediately end and sanity to be restored. South Africa’s government has a very limited say in this, but it can do much to help protect the nation from the coming pain.
The most urgent action needed before Wednesday’s fuel price hikes is immediately suspending or lowering the fuel levy and taxes for the duration of the war.
Further interventions that need to be put in place include:
- Providing support to Eskom to lower the price of electricity.
- Expediting measures to return Transnet and Metro Rail to full capacity to shield food and urban commuters from inflation.
- Targeted support for the agricultural sector to help reduce food inflation.
- Adjusting social grants, including the SRD Grant, for inflation.
- Expanding public employment programmes to absorb more unemployed.
- Distributing food parcels to indigent households and social grant recipients.
- Offering financial relief for embattled companies and sectors, including fixing the Unemployment Insurance Fund’s Temporary Employment Relief Scheme.
- No repo rate hikes by the Reserve Bank.
- Loan and insurance payment holidays for struggling consumers and businesses.
- Halt on retrenchments by the private sector.
It is critical that Nedlac urgently convene the leadership of government, business and labour to craft a rapid response to this coming disaster. South Africa cannot afford to weather this storm on a wing and a prayer. Government must put in place a bold and progressive financial, economic and social relief package, starting with slashing fuel taxes before the Wednesday’s price hikes.
Issued by COSATU
Matthew Parks (COSATU Parliamentary Coordinator)
Mobile: 082 785 0687
Email: matthew@cosatu.org.za