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The ongoing escalation in the price of fuel provides a first test to the ANC NEC Lekgotla’s business unusual approach and we expect government to act decisively to intervene on behalf of workers and poor households. The increase of petrol by 28 cents, diesel by 9 cents and paraffin by 58 cents spells bad news for all South Africans but the impact on poor families will be even worse.

Poor households are already struggling to survive under these difficult conditions and an increase in the price of paraffin will leave many poor families worse off.

This increase in fuel prices will create a level of hardship for a society that is already suffering from high levels of unemployment and stagnant or declining real wages. Low- and moderate-income families are going to be plunged further and further into debt because their wages are now inadequate to afford the basic amenities.

The National Credit Regulator’s reports confirms that workers are drowning in debt.  This coupled with electricity price, food prices and rising interest rates will make it even harder for workers to feed and clothe their families.  It will push thousands of workers to default on their loans and risk losing their homes, cars and other possessions.

This will also threaten the sustainability of thousands of SMMEs and place their employees in danger of losing their meagre wages and being retrenched.

We are still puzzled by the government’s reluctance to release the research report on the feasibility of a fuel price cap in South Africa, and a comprehensive review of the fuel price regime with the intention of reducing the taxes which constitute 32% of the fuel price regime.  This unfulfilled commitment was made by then Minister for Energy, Jeff Radebe in September 2019 and Ministers for Mineral Resources and Energy and Finance, Gwede Mantashe and Enoch Godongwana in April 2022.

These higher fuel prices drain the purchasing power of most South Africans and retard economic recovery. It is in the best interest of government to find a workable solution to this ever-present challenge.

Whilst there is little that government can be do about the international oil price volatility, it can, as it did in 2022, provide relief to commuters and the economy by lowering our fuel taxes.  This will have the additional benefit of reducing inflation and the insatiable temptation by the Reserve Bank to raise the repo rate and thus further impoverishing workers and suffocating the economy.  The Department of Transport needs to place the Road Accident Fund under administration and retable the RAF and Road Accident Benefits Scheme Bills at Parliament.  These are key to fixing the anarchy prevalent at the RAF and reducing its temptation to demand above inflation increases for the Fuel Levy.

Treasury needs to move with speed to table a comprehensive debt relief package for Eskom to take up at least two thirds of its debt off its books in the 2023/24 Budget scheduled to be tabled at Parliament in February.  This package must include a raft of additional support measures to enable Eskom to plug the corruption, wasteful expenditure and procurement leakages that cost it billions every year.  These interventions are needed if we are to wean Eskom off its suicidal addiction to double digit tariff hikes. 

The Federation expects government to adjust social grants, consider payroll tax cuts or other assistance to lower-income households to help offset the impact of higher prices.

The government should also consider increasing and expanding subsidies for public transport and invest in our transport system. There is an urgent need to improve the quality and efficiency of our public transport, particularly in poorer communities and rural areas.

This unrestrained escalation in the cost of living will poison the upcoming wage negotiations season and will automatically push our affiliates to demand above inflation salary adjustments for our members.

Issued by COSATU