GDP numbers: Too early to celebrate – COSATU

Federation says GDP growth just one indicator of economic development

COSATU statement on the latest GDP numbers

5 September 2017

The Congress of South African Trade Unions has noted the report that shows that South Africa’s economy, as measured by the GDP has rebounded with 2.5% growth during the second quarter of the year. The second quarter data shows year-on-year GDP growth was 1.1%, and for the six months growth has been 1.1%.

This report represents an improvement from the decline that was reported in the last two quarters, where we saw a decline of 0.3% in the fourth quarter of 2016 and a 0.7% contraction in the first quarter of 2017.

According to Statistician general Pali Lehohla the agricultural sector was the biggest contributor to the GDP with a contribution of 0.7 of a percentage point to overall GDP growth. Mining grew 3.9% contributing 0.3 of a percentage point to overall growth.

While these numbers are encouraging, it is still too early to celebrate. We cannot ignore the fact that GDP is but one indicator of economic development and does not factor in other indicators such as unemployment and income inequality.

The major pillars of an economy in any country are the agriculture, mining and manufacturing sectors. Unfortunately, while all of these sectors are growing they are not creating jobs, firstly, because the first two sectors provide raw materials for the manufacturing sectors that is almost nonexistent in this country. Secondly, these sectors are not creating jobs because of automation and mechanisation that has seen workers being replaced by machines.

It also is noticeable that while the GDP numbers are looking less gloomy than before even the best contributor to the data, which is agriculture did not contribute significantly to number of people employed because of mechanisation.

In fact the mining and agricultural sectors have offered very little positive news for the workers.  Mining companies continue to submit section 189 retrenchment notices showing their intention to retrench more workers.  AngloGold Ashanti and Bokoni Platinum Mine in Limpopo are planning to retrench 8 500 and 2651 workers respectively

Workers in the agricultural sector continue to work long hours more than 50 hours per week but they are paid only for 40 hours, they do not have leave days, sick maternity and paternity leave which are mandatory in terms of the law. When these workers get sick because of the lack of rest they are accused of being lazy. We therefore continue to argue that economic growth cannot be achieved at the cost of the workers.

This does not augur well for an economy that is struggling with the real unemployment rate of 38%, with close to 10 million people struggling to get jobs.  This is a crisis considering that the NDP projected that the economy will create 11 million jobs by 2030. In order to achieve this, the economy would have to grow by 5.4% per annum, with unemployment of 6% per annum in 2030.

This will not happen as long as the private sector is continuing with their investment strike, with more than R 800 billion of their cash reserves sitting in bank accounts instead of being invested back into the economy.

This situation also calls for a strong and decisive leadership at apolitical level where we need political stability and policy coherence and clarity. The reality is that for SA to industrialise, we need to transform the economy and move away from the colonial economy of exporting raw goods on the basis of cheap labour.

COSATU reiterates its call for a moratorium on retrenchment and for government to convene a jobs summit in order to develop short and long term measures to stem the jobs bloodbath.  We already have a framework for South Africa’s Global Economic Crisis adopted on the 19th of February 2009 that we can build on to formulate our collective response to this economic predicament. Fixing what is wrong with the South African economy will require a collective effort from all social partners and a bold and decisive leadership from government.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 5 September 2017