The chorus to tackle the unpredictable South African currency seems to be growing ever louder, with a number of unions calling for a conference on the rand.
Trade union Solidarity on Thursday joined the bandwagon by calling on the government, organised business, economists and organised labour to hold a summit conference to discuss the effect of the strong rand on unemployment in the country.
Speaking during a report released on the issue in Johannesburg, Solidarity-commissioned economist Adam Jacobs said the rand is currently overvalued by 40%, which has a destabilising effect on the economy and job security.
A number of companies have threatened to retrench workers, particularly in the mining industry, because of the stronger rand, which they say is eating away their profits.
Earlier this month listed gold mining company Harmony cited that it would close six shafts as a cost-cutting measure, which could affect thousands of jobs in the mining industry.
Harmony later reached an agreement with unions for the immediate redeployment of workers as a temporary measure from operations where serious conditions exist.
This came after a presentation of a report by a task team looking into the viability of the six shafts that Harmony had earmarked for closure.
According to the National Union of Mineworkers and trade union Solidarity, the task team report noted that the closure of four of the identified shafts was “certainly unjustifiable”.
Jacobs stated that the detrimental effects of an overvalued rand on stability and job security are as severe as those of an undervalued rand.
He said there is a growing concern that thousands of workers in the mining industry and the agricultural, manufacturing and tourism sectors may lose their jobs as a consequence of the overvalued rand.
The Solidarity report advocates steering the exchange rate towards a more “realistic” level in order to create stability.
“We accept that local, sectoral and business factors affect retrenchments. Our feeling was, however, that we are dealing with macro-economic problems that demand a solution. The report is an effort to make a positive contribution in an attempt to find solutions to the crisis facing many companies,” Solidarity spokesperson Dirk Hermann said.
The report suggests that a realistic rand valuation would be approximately R8,75 against the dollar.
Hermann added that an overvalued rand means that many sectors such as mining, manufacturing, tourism and agriculture find it difficult to be internationally competitive.
The report states that 87 000 workers lost their jobs in 2003 and a substantial increase in job losses is foreseen.
The trade union has asked the Chamber of Mines to take the initiative in organising the conference since that sector is the hardest hit by the overvalued rand. — I-Net Bridge