COSATU disappointed but not shocked by the Reserve Bank’s decision to increase interest rates

The Congress of South African Trade Unions is deeply disappointed but not shocked by the inconsiderate decision of the South African Reserve Bank’s Monetary Policy Committee to increase the interest rates by 50 basis point. This decision will squeeze and ultimately decimate an already bleeding working and middle classes.

COSATU is not shocked because the abstract decisions of this privately owned bank are not based on economic reality that is experienced by most South Africans. Workers are already hurting because their meager salaries are not keeping up with escalating prices of energy, food, transport and electricity. The only ones to benefit from rake hikes are banks who will rake in even more money from the poor for their loan repayments.

We reiterate our opposition to the South African reserve bank's continued use of inflation targeting policy as a flagship monetary policy framework. It is not working and excercebates the problems faced by the poor in this country.

This will further repeal their wages and will result in most of them struggling to repay their loans. Our members are amongst the most highly indebted workers because of poor wages as a result of the untransformed apartheid wage structure they are subjected to.

This decision will not only punish working and middle class South Africans, who are already battling to make ends meet but will also reduce expenditure and consumption further stifling economic growth and job creation.

This does not help our economy that is already projected to grow by 0,9% this year and is continuing to shed jobs across all sectors. This makes a mockery of the government’s commitment to job creation.

This is the continuation of the discredited GEAR policies by the privately owned Reserve Bank. The GEAR strategy was premised on tight fiscal and monetary policy, in the hope that private investment would drive economic growth, create jobs, and lead to a more equitable income distribution.

Unfortunately, what we have seen has been low growth, massive job losses, falling private sector investment, falling domestic savings, and a worsening current account deficit1.

One of the lessons from the past few years however, is the fact that private capital has failed to take up the opportunities and responsibilities availed to it. Instead of leading job creation, private capital has led job shedding and capital disinvestment.

Workers are under siege in this country because ,while the SARB is squeezing workers' small salaries, at the same time the government and the private sector are busy lambasting and blaming workers for demanding a living wage and decent increases to survive. We call on all works to unite and prepare themselves for serious upcoming battles to push back against this onslaught. We reiterate our position that nothing good will happen, in this country, if the Reserve Bank is not nationalised.

Statement issued by Sizwe Pamla, COSATU national spokesperson, 28 January 2016