The trend in labour unit costs was a major threat to inflation-targetting, Reserve Bank governor Tito Mboweni said on Wednesday.
Speaking at a public forum in Johannesburg, Mboweni said that during 2002, wage settlements trended higher as inflation rose.
”Our concern is that wage settlements tend to be backward-looking, particularly in the case of multi-year agreements.
”Wage increases that are consistently above the actual inflation rate constrain the downward movement of inflation.
”The bank would like to see wages and prices being set in a forward-looking manner, on the basis of the inflation rate that is expected to prevail over the period for which wages are being set.
”This will not only ensure a faster decline in inflation, but also a lower cost in terms of output and employment,” Mboweni said.
Two weeks ago, a total of 100 000 mineworkers faced the prospect of not going to work due to an impasse on pay rise talks between their union and mine bosses.
The strike was targeted at big mining firms like AngloGold, Gold Fields and Harmony. Two coal mines — Ingwe and Kuyasa — were also to be targeted, but were taken off the list after a settlement was reached.
Mboweni said on Wednesday that nominal remuneration for each worker increased by 10,6% last year, and rose by 10% in the year to February 2003.
”The slowdown in economy-wide productivity growth and rising nominal wage growth resulted in non-agricultural unit labour cost accelerating from a year-to-year rate of 4,1% in 2001 to 7,0% in 2002.”
The governor urged South African exporters to improve their competitiveness in productivity as the current slowdown in the manufacturing sector was caused by the weak state of global demand, not the improving exchange rate.
”South African exporters will have to focus even more on improving competitiveness through productivity enhancements,” he said.
”The slowdown in exports, combined with a relatively buoyant import demand due to increased investment expenditure, resulted in a current account deficit of R6,8-billion… in the first quarter of 2003.
”This followed a surplus of R4,3-billion in the fourth quarter of 2002. The most recent trade figures, however, suggest that although the current account deficit is likely to persist in the second quarter, it is not a major cause for concern.” – Sapa