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The Federation of Unions of South Africa (FEDUSA) is guardedly pleased with the unchanged repo rate as announced by the South African Reserve Bank (SARB) today. However, FEDUSA remains convinced that more attention should be given to economic growth and the much needed creation of more jobs in South Africa.

“We are cautiously positive about the unchanged rate, especially in the light of the fact that inflation rose to 5% as reported this week” said FEDUSA General Secretary Dennis George. “On the other hand, we are mindful that our members are forced to tighten their belts due to rising fuel and food prices. Working people have absolutely no control over fluctuations in the oil price, and our uncompetitive market uses such opportunities to punish consumers with unnecessarily exorbitant price increases,” he added.

FEDUSA believes that the SARB should, through applying monetary policy provide the necessary support to grow our economy and create more jobs. Finance Minister Pravin Gordhan on numerous occasions emphasised the irrefutable importance of economic growth, once suggesting a new "national intent" of pursuing an economic path that targets sustained gross domestic product (GDP) growth of 7% for a period of 20 years.

“Although the MPC has always claimed an accommodative monetary policy stance, FEDUSA still continuously campaigns for anchoring inflation but also stimulating growth and employment. We have also argued that simply looking at inflation was both simplistic and unfair, in that it punishes consumers twice – first through price increases and then through rising interest rates. While we understand that inflation needs to be anchored to protect savings and capital, we also need to protect working people who struggle with expensive credit for essential items such as accommodation and vehicles”, said George.

Notably the Reserve Bank Governor made specific reference to the instability in the mining sector, and how this could negatively affect foreign investment and economic growth. It is also important to note that above-inflation wage demands may create a spiral of inflationary pressures.

“As trade unions we are fully aware of the negative effects of labour unrest on foreign investment, economic growth and job creation. However, we still believe in the principle of fair wages and the positive effects on consumer spending patterns. It is important to note that our economic growth was already sluggish before the recent mining uprisings, and we still failed to create more jobs,” said George.

“We must also have due regard for the effect of the euro crisis on our vulnerable export-led industries. There are key industries that are really feeling the pinch due to the pressures on our European trading partners and these are also matters outside of our control,” he added.

A FEDUSA delegation will meet with the Reserve Bank Governor and senior researchers tomorrow to discuss, inter alia, the policy of inflation targeting, the exchange rate, economic growth and the problem of unemployment.

“We look forward to engaging with the Reserve Bank on these matters. Hopefully we can share knowledge and work towards plotting a realistic and sustainable growth path for our economy. We will also talk to them [the Bank] about capacity-building initiatives and possible research collaboration,” concluded George.