The Congress of South African Trade Unions (COSATU) welcomes the South African Reserve Bank (SARB)’s decision to provide workers and the economy badly needed relief with a repo rate cut of 25 basis points.

The National Credit Regulator reports on household debt paints a scary 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. 

Repo rate hikes 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. 

Pegging the repo rate at excessive levels inflicts often unbearable pain upon workers, especially when the key factors in South Africa’s inflation are administered prices not consumer driven, e.g. the fuel price hikes based upon international oil price 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.

The 25 basis points repo rate cut will reduce the debt burden upon millions of workers, enabling 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 space to provide further relief to the nation in the new year.  We urge SARB to further lower the repo rate and thus give breathing space to workers, the unemployed and an economy struggling to grow. 

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

Issued by COSATU

Matthew Parks (COSATU Parliamentary Coordinator)

Mobile: 082 785 0687

Email: matthew@cosatu.org.za