GDP does not factor in unemployment – COSATU

Federation says numbers are heartening but only one indicator of economic development

COSATU statement on the latest GDP numbers

6 December 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 continued its recovery with 2 % growth during the third quarter of the year. These are optimistic and helpful news and hopefully the fourth quarter will consolidate on these gains.

While these numbers are heartening, 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.

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.

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.  With these numbers, we cannot afford to have a jobless growth like we experienced before 2007. This is the reason why COSATU reiterates its call for the broadening of the mandate of the reserve bank to include economic growth and employment creation

The Reserve Bank should consider reducing real interest rates, and government should consider introducing concessional finance for productive investment.

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.  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, 6 December 2017