The Congress of South African Trade Unions (Cosatu) has called for the reversal of Thursday’s 50 basis point interest-rate hike, saying the decision was out of tune with the country’s developmental needs.
”Cosatu believes that the South African Reserve Bank’s policy of raising interest rates, in line with a strategy based on inflation targeting, and its obsession with treating inflation and credit expansion as our key economic challenges, is seriously out of step with the needs of a developing economy like South Africa, which has massive problems of high unemployment, widespread poverty and huge inequality,” the union said in a statement on Friday.
Calling on the Reserve Bank to withdraw its decision, Cosatu said the institution’s conduct was insensitive to the plight of homeowners with bonds and consumers with credit accounts.
”Cosatu demands the reversal of yesterday’s [Thursday’s] increase and a lowering of lending rates so that the country’s monetary policies can be brought into line with the national developmental priorities,” the union said.
Interest-rate increases, Cosatu said, make it more difficult for businesses to raise capital and create new jobs.
”It causes others to collapse, which leads to more retrenchments and throws even more workers into poverty.
”It also strengthens the rand, at a time when it had fallen to a more acceptable level — this could lead to a new flood of cheap imports and more job losses in manufacturing industry.”
Cosatu said Thursday’s hike had implications for the current labour dispute between civil servants and the government.
”This latest increase also powerfully reinforces the public-service workers’ argument for a 12% pay increase.
”It will mean that most of them now face further increases in their already rocketing cost of living,” the union said. — Sapa