A South African labour union said on Wednesday workers should not be blamed if the central bank missed its inflation targets because of their demands for higher wages.
Federation of Unions of South Africa (Fedusa) general secretary Chez Milani said the body accepted the benefits of inflation targeting, but remained sceptical about whether the policy would be successful.
Fedusa has around 500 000 members, mainly white-collar workers.
On Tuesday Reserve Bank governor Tito Mboweni told parliament inflation targets may have been introduced too quickly and a lack of domestic support was making them even harder to achieve.
”It is very easy to condemn the actions of unions which have pressed for higher wage increases for workers who are unable to keep up with ever growing expenses, from such a comfortable financial position such as that of Mr Mboweni,” said Milani.
Trade unions want wage agreements concluded last year to be revised to take into account the rand’s unprecedented 37% decline against the dollar in 2001. Analysts say such demands will add to growing inflationary pressures.
The government has awarded civil servants a nine percent salary increase — well above the three to six percent inflation target for this year and 2003.
The central bank has hiked its key repo rate by 300 basis points to 12,50% this year in an effort to bring inflation down to within the target range for 2003. Analysts believe that the target for 2002 has already been missed.
”In reality however, many workers have very little disposable income available with which to absorb interest rate and food price increases… CPIX trends are a valid justification for above inflation increases being sought by unions,” said Milani.
CPIX, the targeted inflation measure, increased at an annual rate of 9,2% in May, pushing out of its government-set target for the seventh consecutive month.
Fedusa said higher wage demands should be seen as a result rather than the cause of inflation.
”The workers cannot be left out in the cold in an attempt to control inflation, where other parties, including the parastatals, have shown so little regard for the Reserve Bank’s targets when considering tariff and price increases,” said Milani. – Reuters