The Congress of South African Trade Unions (Cosatu) on Friday condemned the 50 basis points hike in the repo rate, saying that the hike would snuff out the glimmer of hope of increasing growth in the manufacturing industry.
“This policy will destroy still more jobs and sabotage prospects of halving unemployment and poverty by 2014,” Cosatu said in statement.
On Thursday, the Reserve Bank’s Monetary Policy Committee hiked the key repo rate by 50 basis points to 8,5% — the third such hike since June.
At a time when there was a small but welcome reduction in the level of unemployment, with 544Â 000 new jobs being announced, the hike would eat heavily into the gains of the labour intensive manufacturing sector, the labour federation said.
It added that the Reserve Bank was “trapped within a misguided strategy of inflation targeting”. Cosatu argued that rising inflation was not the sole challenge facing the country.
“The [challenge] economy faces [is] not inflation but high unemployment, mass poverty and sluggish growth. Inflation targeting is a policy adopted by countries with developed economies and unemployment below 10%. It is totally unsuitable for a developing economy like South Africa. The government must scrap this anti-developmental, neoliberal policy and implement a strategy that makes fast growth, job creation and poverty reduction its top priorities,” Cosatu concluded. — I-Net Bridge