Cosatu's demands to ANC

Trade union federations wants gold mining companies nationalised, tightening of foreign exchange rules, says Reserve Bank should resist rand appreciation and states the SARB's primary role should be job creation

Cosatu called on Tuesday for a reversal of measures taken to relax exchange controls and for taxes on short-term capital flows.

The positions laid out in an economic policy paper put pressure on the ruling African National Congress to reconsider its foreign exchange and economic policies when it holds a major strategy setting session next week.

"Due to relaxation of capital controls, (company) profits were repatriated in the form of dividend payments ... The outflow of funds increased South Africa's dependence on short-term capital flows to finance expenditure," it said.

COSATU shocked by jobs statistics

The Congress of South African Trade Unions is shocked at today’s report by Statistics South Africa that the country lost 79,000 jobs in the first quarter of 2010.

From January to March, employment in the formal, non-agricultural economy fell by 1% - to 8.08 million. This comes on top of the loss of 870,000 jobs last year. Then we were in the midst of a major recession which pushed the unemployment rate up to 25.2% - 32.5% if you include those who have given up seeking work.

In the first quarter of 2010 however, the economy expanded by an annualised rate of 4.6%, yet still the jobs are disappearing! The construction industry alone lost 7,000 jobs in the first quarter from the previous three months compared with the same period last year, mainly from the completion of the World Cup stadiums.

COSATU on interest rates

The Congress of South African Trade Unions deplores the Reserve Bank Monetary Policy Committee’s decision not to cut the repo rate but keep it at its current high level. The MPC has yet again today missed an opportunity to give a boost to economic growth and strike a blow for job creation.

President Zuma in parliament yesterday warmly welcomed the joint statement by manufacturers and the three trade union federations, Cosatu, Fedusa and Nactu, on industrial economic policy interventions needed to create decent jobs, which was signed two days ago.

That joint declaration identified one of the most serious problems facing our economy as that the unavailability of finance, and the exorbitant level of lending rates by the financial sector, which make borrowing prohibitively expensive.

Vavi hits out at strong rand

The rand is far too strong, Cosatu general- secretary Zwelinzima Vavi said yesterday.

Vavi said this during the launch of a joint declaration by the country’s three major trade union federations and a grouping of important South African manufacturers in Johannesburg to create decent jobs.

“The declaration calls for interventions to ensure an appropriately valued, competitive and stable currency,” Vavi said.

A competitive currency would allow manufacturing to compete on a similar footing to other developing countries, he said.

SA’s labour unions and businesses call for a competitive exchange rate

Yesterday South Africa’s three major trade union federations and a number of large local manufacturers signed a joint declaration calling for “interventions to ensure an appropriately valued, competitive and stable currency”. Congress of South African Trade Unions Secretary General Zwelinzima Vavi said yesterday that a competitive currency was needed in South Africa in order to allow domestic manufacturers to compete on a similar footing to that of other countries.

Vavi also called for a further reduction in real interest rates along with the introduction of concessional financing for productive investment.

It remains an open question as to what the “correct” level for the currency that would satisfy both exporter and importer concerns would be.

COSATU statement on the National Planning Commission

The Congress of South African trade Unions has noted the names of the people appointed to serve on the National Planning Commission and hopes that they will immediately start to tackle the many serious challenges that the country faces.

COSATU welcomes the appointment of three of the people whom it nominated – Chris Malikane, Vivienne Taylor and Karl von Holdt – and is confident that they will vigorously fight for policies in the interests of the workers and poor South Africans.

We welcome several others who have a good record of supporting progressive policies.

COSATU is however concerned at the over-representation of business people, who constitute nearly half of the NPC.

COSATU welcomes small cut in repo rate

The Congress of South African Trade Unions welcomes today’s 50 basis points cut in the repo rate, to 6.5%, by the South African Reserve Bank`s Monetary Policy Committee (MPC) Although this is too little-too late, we hope that it is a turning point and that the Reserve Bank has finally listened to the debate in the ANC, COSATU and civil society and accepted the overwhelming argument that monetary policy must be guided by a mandate to promote economic growth and job creation, and not just to control inflation.

The federation agrees with the MPC that “the pace of (economic) recovery is expected to remain slow”, and welcomes its recognition that “the improved inflation environment has provided some space for an additional monetary stimulus to reinforce the sustainability of the upswing without jeopardising the achievement of the inflation target”.

COSATU welcomes Minister’s pledge to address inflation targeting

The Congress of South African Trade Unions welcomes Finance Minister Pravin Gordhan’s commitment to address the South African Reserve Bank’s inflation targeting policy when he unveils the national budget.

He said: “We are talking, working, thinking, reflecting, interacting with the key stakeholders from within the government and listening to the voices from outside and will inform South Africa where we intend to go on February 17th”.

COSATU and its allies have argued strongly for a change in the SARB’s mandate, so that its Monetary Policy Committee has to take regard of broader national priorities – particularly economic growth and job creation – rather that a narrow concern only with inflation targeting.

This policy has resulted in excessively high interest rates over a long period, which has imposed unnecessarily heavy burdens on both individual consumers and businesses, and caused thousands of workers to lose their jobs.

Cosatu's opposition to inflation target leaves the poor cold

While inflation targeting generates sound and fury among trade union officials and some politicians, the general public find the topic a bore. This emerges from interviews by TNS Research surveys with 2 000 adults from seven major metropolitan areas.

The survey in September last year showed only 20 percent of people disagree with inflation targeting as a policy while 42 percent "don't know" their views. "While knowledge of the policy improves with wealth and education there is still widespread confusion. It is clear the policy is a mystery for many," said TNS director of innovation and development Neil Higgs.

Among the poorest sections of the population, 59 percent had no view, while 42 percent of the middle section and only 23 percent of the wealthy said the same.

COSATU condemns unchanged repo rate

The Congress of South African Trade Unions is deeply disappointed that the Monetary Policy Committee of the Reserve Bank has yet again missed an opportunity to give some hope to the millions living in poverty and without jobs by cutting interest rates. She has dashed their hope of an end to the economic catastrophe in which they are surviving.

By leaving the Repo Rate unchanged, the Monetary Policy Committee has let down those who were hoping for an end to the rigid conservative policies of former SARB Governor, Tito Mboweni, and condemned the majority of South Africans to more months of struggling to survive.

Although there is some minimal evidence that the economy is beginning to revive, the improvement is far too small to allow for any complacency, and workers and the poor are still mired in a deep recession. As COSATU has been saying for the past years, South Africa has a national emergency, which requires an urgent national response.

While Government, business and labour are starting, albeit too slowly, to implement the many excellent proposals in the Framework Agreement on South Africa’s response to the global crisis, to escape from the recession and save and create jobs, the Reserve Bank is sabotaging their efforts by sticking with policies that take us in the opposite direction.

Patel loses key labour voice

The special adviser in the economic development ministry, Neil Coleman, has left the post, leaving the yet-to-be set up ministry without a key voice from labour.

His departure will hobble efforts by the left to use the ministry as a weapon to change SA’s economic policy.

Coleman yesterday confirmed he did not want his contract to be renewed, and that he had stopped work at the end of last month.

“I did not resign, my contract came to an end. I was seconded to the department, and do need to return to my work in Cosatu (the Congress of South African Trade Unions),” he said.

But sources in the department suggested that Coleman had “resigned” the post amid talk of differences between him and Economic Development Minister Ebrahim Patel.

“The question that has to be asked is why … the department still has so very little strategic capacity? It’s almost one year since the administration took office , and given the challenges in the economy both globally and domestically, why is the department not getting off the ground?” a source said.

Coleman was Patel’s right-hand man. The labour movement was keen for Patel to take the lead on economic planning in the Cabinet. Although a novice in the executive, he won a significant turf battle when he, and not Minister in the Presidency Trevor Manuel, was made responsible for economic planning and co-ordination.

Patel said the department had made “good progress” since it was established as a legal entity.

“We are in the process of starting to hire people at senior policy and management level. We had to establish the ministry and the department from scratch, and until the end of March we will piggyback off the back of the department of trade and industry. All of this is now going to change because we have had sign-off on our staff structure and the budget has been approved,” Patel said.

“It’s no secret that officials in the Treasury were hostile to the creation on this new ministry, hence their efforts to frustrate efforts to get us off the ground,” an insider said.

Asked why he had not appointed Coleman as a policy adviser, Patel said he did not want to “strip Cosatu” of its strategic capacity and that Coleman was always going to return to his work as coordinator of Cosatu’s Walking through the Doors campaign — which aims to influence ANC and government economic policy.

Source: Business Day

Have your say!

Use this post to comment on, or make suggestions about any aspect of the financial system in South Africa.

Topical: What should the mandate of the South African Reserve Bank be?

Aspects to be considered:

• Monetary policy and inflation targeting
• Monetary versus fiscal policy and the budget deficit
  
• Promotion of economic growth and employment
• Exchange rate intervention, eg to stimulate exports
• Monitoring of asset prices
• Promotion of Johannesburg as a financial centre

Having determined the targets, what instruments can the Bank use?

Financial Sector Charter and COSATU

The Financial Sector Campaign Coalition (FSCC) and COSATU are disappointed but not surprised at the latest move by the Banking Association of South Africa to pull out of the Financial Sector Charter.

The banks are showing their true colours after years of undermining the Charter`s attempts to measure financial sector transformation in an independent and objective forum.

This week`s antics by the Banking Association of South Africa show the cynicism of the banks towards transformation. BASA Managing Director Cas Coovadia is reported as saying the banks would in future not engage with organised labour and community groups but would engage directly with Government and the Association of Black Securities and Investment Professionals (Absip) "because this body is among the organisations which have black interests".

...

Souce: COSATU

Press opinion: If the debate is real, it's dangerous

The ANC's decision to review the mandate of the Reserve Bank

Ever since the balance of power shifted in the tripartite alliance, President Jacob Zuma has been careful to be seen to allow the expression of diverse opinions on economic policy, particularly from the ANC's two formal allies, trade union federation Cosatu and the SA Communist Party. After all, no harm can be done by talking about things - or can it?

When finance minister Pravin Gordhan presented his first medium-term budget policy statement in October, he was able to talk tough on spending (which the ANC's allies always want more of) because of the expected fall in tax revenues and the sharp rise in the projected budget deficit. But he seemed to compensate by saying that "alongside inflation reduction and financial stability, we must seek faster development and employment creation. I welcome public debate on this issue." Gordhan also said he had agreed with Reserve Bank governor Tito Mboweni and governor-designate Gill Marcus that "monetary policy should also support our aim of balanced and sustainable growth".

So what exactly can it mean to say that the Reserve Bank mandate will be reviewed? What more is wanted?

It's true that the Bank regards its primary goal as "the achievement and maintenance of price stability". It also maintains that SA "has a growing economy based on the principles of a market system, private and social initiative, effective competition and social fairness".

There's a lot there that can be assumed to be ideologically provocative to the SACP (which, not surprisingly, still believes in communism) and Cosatu (which remains committed to socialism). But what would they change? Would they say that price stability (and therefore the control of inflation) should not be the primary goal? Do they reject the role of markets?

The policy of inflation targeting tends to inflame tempers on the Left, but it has not been rigidly applied. While there are arguments for raising the target band from its present 3%-6%, to abandon the concept would send a signal that inflation is to be encouraged. Quite apart from its other destructive effects, on both the economy as a whole and on investor confidence, high inflation would be a terribly punitive tax on the poor and the aged. That is the last thing we need in a country where so many are unemployed and so many survive on meagre social grants and old-age pensions.

Yet Cosatu and the SACP do not want play-play discussions and they will not enjoy being thrown sops. The "review" of the Bank's mandate should be seen for what it is: an attempt to change economic policy through the back door.

Extracted from Financial Mail editorial

Cosatu wants to influence economic policy.

After a meeting of its central executive committee yesterday, the Congress of South African Trade Unions (Cosatu), General Secretary Zwelinzima Vavi said Cosatu wanted a complete overhaul of the economy.

Cosatu said it would develop a framework on alternative policies on exchange-rate management, interest-rate policy and inflation control. Cosatu’s stance comes two weeks after a meeting with its allies, after which the African National Congress (ANC) made it clear it led in making policy.

Although it made concessions at the alliance meeting, yesterday’s announcement is likely to set the tone for strident debate on economic policy among the allies and in the Cabinet.

Cosatu said it would form “tactical” partnerships with business to lobby on specific issues.

Manufacturers would be its partner in lobbying on a weaker rand rate and it prefers a rate of R10/USD to support the sector. It would partner mining companies to oppose Eskom’s proposed tariff hikes of 45% a year for three years. Vavi said there was a need to move away from capital-intensive sectors and focus on more-labour intensive sectors.

He blamed past economic policies for what he termed the current crisis.

“The underlying cause of the crisis now ravaging the working-class communities is the mistaken policies between 1996 and 2004, of cutting tariffs and privatising basic services, conservative fiscal and monetary policies pursued in those years.”

Cosatu’s alternative framework was also likely to set out its position on the need for a clearer growth and development strategy.

NUMSA is disappointed about interest rate decision

The giant National Union of Metalworkers of South Africa (NUMSA) notes with disappointment the decision by the South African Reserve Bank (SARB) Monetary Policy Committee announced by the newly appointed Governor Ms Gill Marcus, yesterday 17 November 2009.

The MPC decided to keep interest rates unchanged at seven percent. This conservative interest rates policy stance constitutes a wrong premise for Ms Marcus particularly when in its own statement the SARB’s MPC stated that economic growth is expected to remain below potential for some time.

In our view as NUMSA, the African National Congress’s (ANC’s) 52nd National Conference (Polokwane 2007) and Elections Manifesto (2009), as well as the ANC-led Alliance’s Economic Policy Summit (2008) have clearly spelled out what is expected of the monetary and interest rates policies. This Alliance Summit identified a need for “urgent national reflection on the appropriateness of inflation targeting as well as the ranges chosen as policy for South Africa given its developmental challenges”. The ANC’s elections manifesto took this further by stipulating that “Fiscal and monetary policy mandates including management of interest and exchange rates, need to actively promote the creation of decent employment, economic growth, broad-based industrialisation, reduced income inequality and other developmental imperatives”.

As NUMSA we believe that the SARB’s MPC decision to keep interest rates unchanged is misaligned to the above objective. The MPC should have cut interest rates, which would contribute towards relieving the working class and the poor from the ongoing crisis that the capitalists have caused. We remain unshaken that the policy of inflation targeting must be scrapped. We shall continue to engage actively with SARB both in boardrooms and in streets until such time that the working class and the poor are prioritised.

NUMSA shall also continue the campaign to ensure that the SARB’s dependence on capitalists which is being championed under the guise of independence is eradicated. Along with this we reiterate our call for the nationalisation of the SARB.

For background information see: Summary of NUMSA’s critique of South Africa’s monetary and financial policy, 18 June 2009.