The Federation of Unions of South Africa (FEDUSA) warns that 2017 and 2018 will be difficult years for working people in South Africa as real household consumption growth averaging just over 1% for the past three years, versus 3.4% on average since 1994 according to the South African Reserve Bank said Dennis George FEDUSA General Secretary.
FEDUSA Affiliates were pushing hard for real wage gains, which boots disposable incomes of households. Households benefitted from declining inflation, particularly for food and fuels, however tax increases announced in the 2017 budget will cut into disposable incomes of households said George.
Employment is projected to decline until the middle of 2019, due to the downgrade, an uncertain and difficult economic environment for job creation without sufficiently offsetting wage moderation. The challenges confronting the economy and working people in the country could be directly blamed on the irresponsible and disastrous appointments of the new Finance Ministers by President Jacob Zuma since 2015. Investment was the worst performing components of GDP in 2016 and is forecast to lag again in 2017 based on the downgrade from investment grade to junk status. It is obvious that the ANC Government under President Zuma has no understanding of how to manage the economy.
The on-going investment slump has two components, first is weak private sector investment, which is broadly explained by a collapse in business confidence that was subdued throughout the post financial crises period. Business sentiment will be further undermined by the sovereign credit ratings downgrade to junk status, which will affect both higher long term borrowing costs and the reputational burden of junk status. Secondly, the recent investment slump will affect the contraction in public sector investment, which was mainly driven by state-owned companies like Eskom, Transnet and SAA. Unfortunately, a portion of higher spending will not translate into real gains given the cost overruns in a variety of projects. The government debt is now anticipated at nearly 53% of GDP in 2018/19, versus for instance, the 2016 Budget forecast of 51% in 2017/18.
The debt-service costs for 2017 amounts to R162,4 billion and the net loan debt is R2, 226 trillion for 2017/18, in comparison with consolidated government expenditure of R1,560 trillion. In the bond markets, lenders consider the credibility of the marco-economic framework of government, the integrity of state institutions, the political environment and the economic growth prospects of South Africa, which is captured in the sovereign credit ratings. In the case of South Africa, Standards and Poor and Fitch has already downgraded the country to junk status, while Moody’s has placed the Baa2 long-term issuer and senior unsecured bond ratings on review for downgrade. The low economic growth, policy uncertainty, political risk, and the weak balance sheets of state-owned companies are major concerns for ratings agencies. FEDUSA is also concerned what impact these economic developments will have on working people in South Africa, specifically public servants (teachers, nurses, police officers) who expect government to provide at least an inflation linked plus 2 percent wage increase to protect their disposable income said George.
Now more than ever, the tenacity and resilience of trade unions will have to stand the test of time, and wither yet another turbulent storm in our beloved South Africa. The 2016 unanimous landmark judgement by the Constitutional Court once again bore testimony to the successful action the three federations, FEDUSA, COSATU and NACTU to stop the ongoing attacks by the Free Market Foundation and safeguarding and preserving the hard-fought gains of the right to collective bargaining, whilst at the same time restoring the affinity of workers, especially young workers to join trade unions remains crucial for the labour movement.
For this reason, the continued advocacy and escalation of the Decent Work Agenda by FEDUSA and other trade unions and federations alike, should continue unhindered. Decent work and the four pillars of its Agenda – employment creation, social protection, and rights at work and social dialogue – continues to be the integral elements of the 2030 Agenda for Sustainable Development. The International Labour Organization’s Declaration of Fundamental Principles and Rights at Work, adopted in 1998, makes it clear that these rights are universal, and that they apply to all people – regardless of the level of economic development. It recognizes that economic growth alone is not enough to ensure equity, social progress and to eradicate poverty.
FEDUSA will continue to champion the fight for the advancement of decent work, with rights at work in particular, given a dedicated focus, to ensure that equitable and accessible opportunities are afforded to all citizens. Meaningful social dialogue amongst the social partners to foster trust and enhance collaboration in times of instability remains the key contributory ingredients to restore economic confidence and steer the ship towards successful progression. Erosion of worker rights is simply out of the question, as FEDUSA has dedicated the month of May 2017, to equip its members to address and identify challenges and opportunities that will be presented by the Fourth Industrial Revolution.
However, given the inevitable hardships that our members are certainly going face in terms of high food inflation and increased transport costs as a direct result of our sovereign rating to junk status, and following the recommendations of our collective bargaining conference in March 2017, we would like to advise our negotiating teams to table demands of no less than the CPI or rate of inflation plus an improvement factor of 2 percent.
The FEDUSA National Executive Committee mandated FEDUSA President Godfrey Selematsela, General Secretary Dennis George and Deputy General Secretary Riefdah Ajam to host nine Provincial Executive Committee workshops during the month of May 2017 to engage with grassroots structures about the state of the economy and the impact it would have on working people.
For interviews please contact:
FEDUSA Media and Research Officer
Cell: 060 676 9145