Manufacturing production data for the month of June has shocked the Congress of South African Trade Unions (Cosatu), the union federation said on Wednesday.
On Tuesday, Statistics South African announced that for the month of June, production had dropped 17,1% from a year earlier after declining a revised 17,2% in May.
In a statement on Wednesday, Cosatu said the data was ”the latest proof” that the country was still mired in a deep recession.
”It is terrible news for thousands of workers whose jobs must now be in jeopardy,” Cosatu added.
This statistic, it said, reinforced the already overwhelming argument in favour of the government’s interventionist policies in the Framework Agreement as South Africa’s response to the global economic crisis, and its detailed policies to revive the economy and save and create jobs.
”These must be implemented with the maximum urgency,” Cosatu said.
In the light of the massive drop in production, Cosatu added that it again appealed to the South African Reserve Bank’s monetary policy committee, who were meeting on Wednesday and Thursday, to cut interest rates.
”This 17,1% drop in output could not be better evidence that the country’s biggest threat comes not from rising inflation but from a catastrophic economic recession and rocketing unemployment.
”Interest rate policy must now come into line with all other economic policies and target economic growth and job creation,” Cosatu said.
The union federation demanded that outgoing South African Reserve Bank governor Tito Mboweni should — in his farewell announcement on Thursday — ”face up to reality revealed by this statistic and go for a minimum 200 basis point drop in the repo rate”.
This would help manufacturing industries to turn the tide of recession and start increasing production and saving rather than shedding jobs, Cosatu said. — Sapa