EDINBURGH — As South Africa enters a recession, President Cyril Ramaphosa has urged businesses to play a part in reducing rising unemployment. He has called on private sector companies to put a freeze on job cuts and has noted, too, that the government doesn’t plan to axe civil servants for the foreseeable future. That kind of political talk will impress potential ANC voters, but it may not please smaller business owners, who are already struggling under the weight of heavy taxes and resent subsidising a corrupt and bloated state administration. – Jackie Cameron
(Bloomberg) – South African President Cyril Ramaphosa urged businesses to place a moratorium on job cuts as his administration tries to contain the fallout of a recession and institutes measures to reignite growth.
The continent’s most-industrialized economy contracted 0.7 percent in the second quarter, after shrinking 2.6 percent in the previous three months, as agricultural output slumped. With elections scheduled for next year, the downturn is a setback to efforts by Ramaphosa and the ruling African National Congress to reverse a decline in support during former leader Jacob Zuma’s scandal-marred, nine-year tenure.
“In our recent meeting with business, we called upon them not to be too hasty to retrench workers, particularly in these difficult economic conditions,” Ramaphosa said in a speech to the Congress of South African Trade Unions’ national congress in Johannesburg on Monday. “We also said that they should try everything they can to avoid retrenchments, and in a way put a moratorium on retrenchment so that we can rise from these challenging economic conditions.”
While the government and unions must discuss ways to ensure the civil service and public wage bill are better managed, there are no plans to fire state workers en masse, according to the president. Cosatu, the country’s biggest labor group, is part of the country’s ANC-led ruling coalition and is strongly opposed to jobs cuts. The unemployment rate of 27.2 percent is near a 15-year high.
Ramaphosa reiterated that the government will unveil a stimulus package that will focus on increasing infrastructure spending, mining reforms and developing the telecommunications industry to stimulate growth and limit job losses.
“The economic challenges that our country faces have their roots in the structure of our economy,” he said. “We have seen a decline in infrastructure build and this is an area we believe we should focus on.”
