Cosatu to engage Bank on repo rate increases

Labour federation Cosatu, an ally of the ANC, has again weighed in on the rising cost of living, calling on the SA Reserve Bank to ease rate increases that have seen the repo rate reaching a level last seen 14 years ago.

It said the Bank needed to play a prominent role in addressing the country’s socioeconomic challenges. The country is beset by persistent load-shedding, rising transport, food, fuel and electricity costs, a stagnant economy and high unemployment.

On May 25, the central bank’s monetary policy committee raised the repo rate by another 50 basis points to 8.25%, the highest since 2009.

The move sees the prime interest rate, which commercial banks use to lend to customers, rising to 11.75%, which is likely to put further pressure on already overburdened South Africans.

Cosatu general secretary Solly Phetoe, in a media briefing after the federation’s three-day central executive committee (CEC) meeting on Thursday, said the union was concerned by the rising cost of living, a stubbornly high 32.9% unemployment rate and entrenched poverty.

Interventions are needed to cushion the poor, including adjusting the R350 special relief dispensation (SRD) grant to the food poverty line of at least R620.

Cosatu also wants the SRD grant and the presidential youth employment intervention programme, which has helped more than 1-million young and unemployed people enter the labour market, extended beyond 2024.

In the 2023 budget the Treasury said the SRD grant paid to 8.5-million people will end in 2024. The grant had a budget of R36bn in 2023/24. The presidential employment stimulus, which has had more than 1.1million beneficiaries since October 2020, will also end in 2024. The stimulus had a budget of R10bn in 2023/24.

Phetoe said Cosatu would be ramping up campaigns to help protect the working class from the rising cost of living and poverty, including engaging the “SA Reserve Bank to ease the excessively reckless and suffocating increases in the repo rate”.

He said Cosatu will embark on a national day of action on July 6 in defence of collective bargaining and against government corruption, the energy crisis and “exorbitant interest rates”.

The government needed to reduce taxes that constitute 28% of the fuel levy: “This is the fastest and most effective way to reduce food and transport and other key goods’ prices and thus providing relief to millions and the economy,” the union’s president, Zingiswa Losi, said.

About the poor state of municipalities, Cosatu wanted the government to expedite implementation of the district development model as some of the municipalities could not be turned around nor sustained. The model proposes that some smaller municipalities be merged for effective rollout of service delivery.

The labour federation expressed alarm that some municipalities were not paying workers on time. Auditorgeneral Tsakani Maluleke told parliament on Tuesday that during 2021/22 the country’s 257 municipalities spent R121.47bn on salaries and wages, with only 38 achieving clean audits, down from 41 in the previous corresponding period.

The municipalities had an estimated expenditure budget of R487.12bn to operate and deliver services. Of this, R262.9bn was allocated to metros. Intermediate cities received R105.3bn, local municipalities R83.2bn and district municipalities R35.6bn.