The trade union Solidarity has handed a memorandum to South African Reserve Bank (SARB) Governor Tito Mboweni calling, among other things, for a national emergency summit to discuss the loss of thousands of jobs because of the rand’s current strength.
The trade union warned that the situation calls for stronger measures than mere observation.
“Thousands of people are being reduced to unemployment statistics and our country simply cannot afford this,” it asserted in the memorandum, handed to the SARB governor after a march by mineworkers to the SARB’s headquarters in Pretoria.
In its memorandum to the SARB, Solidarity charged that entering the boxing ring of the international economy with an overvalued exchange rate is like “a youngster taking on a heavyweight”.
“He might be able to dodge his opponent for a while, but he will be knocked out in the end,” it stated.
“The idea is that the exchange rate should at all times be at a level that will make local businesses competitive, while greater stability of the exchange rate will benefit the business climate and facilitate planning,” it added.
Solidarity said that the aim of President Thabo Mbeki’s “people’s contract” was to create jobs and fight unemployment.
“The overvalued exchange rate, however, creates poverty and fights employment.”
The memorandum, containing 14 statements, also calls on the SARB to concentrate not only on inflation targets, but also on growth and employment targets.
“The overvalued rand suits the Reserve Bank’s strong focus on inflation targets, but targeting just inflation is not enough. The idea of a multidimensional target is also supported by the American reserve bank, which sets employment, inflation and growth targets.
“The economy will benefit greatly from a situation in which the negative effects of the rand exchange rate are countered with growth instead of job losses,” Solidarity said. — I-Net Bridge