The Congress of South African Trade Unions is deeply concerned to hear that retail company Massmart is planning to retrench 1,440 employees. This is scandalous when considering that we have millions of unemployed people already struggling to get jobs, while the CEO’s and managers continue to pay themselves hefty salaries and bonuses. We call on all unions in the sector to work together and demand that the employer to explore other alternatives to retrenchments.
COSATU will be meeting with its affiliated union South African Commercial, Catering and Allied Workers Union (SACCAWU) to discuss this Massmart turnaround strategy and its implications for the workers. This is a reminder that foreign direct investment is not a panacea to all our economic problems. When Massmart was sold to Wal-Mart some few years ago; the federation objected on the ground that these mergers and acquisitions result in job losses long-term.
This is the same thing that happened when the Steinhoff Group acquired the JD Group. They slashed thousands of jobs and reduced its size and operations to increase profits and better returns for investors. They did this without thinking about the workers.
COSATU will monitor the developments on this front and will fight to oppose the planned retrenchments at Massmart because they want to create a crisis of profit that will cost workers their jobs and their livelihoods. This is deplorable because these same companies are refusing to invest in this country but are only want to take their profits out of this country.
This issue also puts to focus the role of our monetary policy in perpetuating our economic problems. The country’s monetary policy has a profound impact on the South African economic environment and the ability of the country to meet its development goals. The interest rate, perhaps the most influential price n the entire economy impacts on core areas of economic activity- aggregate demand, investment including inflation.
South Africa has experienced exceptionally high interest rates over the past few years, with devastating effects on the household standard of living. Many families are highly indebted and therefore do not have the money to spend on the economy. The retail sector is likely to pay a price for this drop in domestic demand.
We reiterate our proposal that the margin between the repurchase rate (at which the Reserve Bank lends) and the bank lending rates needs to be looked at.
This planned jobs bloodbath also directly undermines the progressive commitments made during the Presidential Jobs and Investment Summits. Business needs to explain if they are part of the solution to the country's economic crises or are, they part of the problem.
Government also needs to rethink the various tax concessions to promote economic and industrial growth because this does not happen. Businesses just keep putting the money into the stock exchange and not into the direct investment such as new factories, where jobs will be created.
The federation will be engaging the CCMA as well to ensure the companies follow the Labour Relations Act's requirements and that alternatives to retrenchments are found and agreed upon. The CCMA has scored significant victories in finding alternatives to retrenchments as part of their commitments to reducing unemployment under the Presidential Jobs Summit.
Issued by COSATU