The Congress of South African Trade Unions (Cosatu) is “deeply worried” about the findings of a KPMG survey suggesting that more than a third of South Africa’s top 120 companies are likely to retrench staff in the next six months.
“If true, this news confirms the federation’s worst fears that the global economic meltdown will soon lead to mass retrenchments and an economic downturn,” Cosatu said.
A snap survey conducted by the firm indicated that the sectors which would be worst-affected would be construction, mining, industrials, financial services, forestry, paper and pulp, vehicles and logistics.
“No less alarming was that the survey also found that as many as 65% of companies were likely to offer staff voluntary packages, rather than forcing them out of work. Unemployment is still unemployment even if it is ‘voluntary’,” noted Cosatu.
It said jobless levels were already far too high and such a big increase in retrenchments would be devastating for individual workers and their families as well as for the country’s economic growth prospects.
According to the survey, about 90% of companies across all sectors had dramatically cut costs not necessarily due to the subprime crisis but rather because of local economic factors such as high interest rates, inflation and the volatile exchange rate.
Cosatu said this confirmed its “prediction” that conservative economic policies, including rigid inflation targeting which has resulted in the constant rise in interest rates, would lead to cutbacks and ultimately retrenchments even before the effects of the global crisis began to bite.
“The report revealed agreement on the need to reduce interest rates and direct taxes, combined with increased government expenditure in the energy sector to stimulate the economy.
The views on both cutting interest rates and increasing government investment in energy are in line with policies that Cosatu has long been campaigning for,” the federation said.
It also welcomed Thursday’s declaration of the Presidential Joint Economic Working Group that all sectors should do “everything in their power” to avoid retrenchment.
“The federation supports their decision to set up a special task team — from business, labour and the government — to look at how best to cope with the knock-on effect of job losses in South Africa, and to minimise job losses and other negative consequences brought by the crisis,” Cosatu said. — I-Net Bridge