The Congress of South African Trade Unions is deeply worried at the findings of a survey by KPMG, reported in the Business Day newspaper on Friday.

The findings concluded that more than a third of South Africa's top 120 companies were likely to retrench staff in the next six months.

"If true, this news confirms the federation's worst fears that the global economic meltdown will soon lead to mass retrenchments and an economic downturn, said Cosatu spokesman Patrick Craven.

The survey also found that about 65 percent of companies were likely to offer staff voluntary packages instead of forcing them out of work.

"Unemployment is still unemployment even if it is 'voluntary'," Craven said.

"With jobless levels already far too high, such a big increase in retrenchments would be devastating both for the individual workers and their families and also for the country's economic growth prospects," he said.

KPMG found that about 90 percent of companies across all sectors had already dramatically cut costs, and said this related not to the recent sub-prime crisis, but to local economic factors such as high interest rates, inflation and the volatile exchange rate.

"This confirms Cosatu's prediction that conservative economic policies, including rigid inflation-targeting which has resulted in the constant rise in interest rates would lead to cutbacks and ultimately retrenchments even before the effects of the global crisis began to bite," Craven said.

KPMG's survey found that there was agreement on the need to reduce interest rates and direct taxes, combined with increased government expenditure in the energy sector to stimulate the economy.

"The views on both cutting interest rates and increasing government investment in energy are in line with policies that Cosatu has long been campaigning for.
"All this gloomy news confirms Cosatu's view that for the majority of South Africans the 2008 'festive' season will be a 'Black Christmas'", Craven said.