GDP shocker highlights the symptoms, let’s treat the problems

If nothing else, this week’s shock 3.2% fall in GDP in the first quarter lays bare the full extent of SA’s economic problems. It also acts a lot like an MRI, showing us clearly where in the country’s body the rot can be found.

The most distressing problems can be found in manufacturing and mining, which shrank by 8.8% and 10.8% respectively. The blame for these disasters can surely be laid – mostly – at the feet of a crisis-riddled Eskom. These dreadful numbers starkly illustrate the steep cost of the governance and strategic failures at the state-owned utility and underscore the urgency of fixing it.

The other sector that was ravaged was agriculture, which fell by 13.2%. A large part of this was due to the weather, specifically drought. There’s not much government can do about making it rain, but it can plan for a much more water-constrained future and make sure that SA’s agricultural sector invests enough to adapt.

It’s time for SA’s business and political leaders to take a hard look at the test results and prescribe a treatment that will work.

From Biznews community member Danie Ferreira

Dear Felicity,

I really enjoy reading your and Alec’s insights regarding business in SA. One thing everyone tap-dances around is the role that trade unions are playing in this sordid affair. I maintain that in this day and age, the trade union movement’s role of protecting workers from exploitation by management/business owners has taken a back seat to trying to dictate economic policy. Call it a different version of state capture.

Their aims/aspirations – growing their membership base, and preventing their members from losing their jobs – are not necessarily at odds with what everyone else in SA wants. They just seem to forget that by getting people working AT ANY COST, would grow their membership levels, and thereby their income, so that the union bosses can drive bigger cars, in their Armani suits, in order to emulate what they publicly despise, and privately covet – wealth.

Just a thought: Trade union action resulted in more job losses and thereby negatively contributed to the latest GDP figures than we can rightly afford – all in an effort to flex political muscle at the expense of their constituents.

In order to turn this economy around, we need to remove the wheel clams keeping this vehicle stationery. We need to clip the unions’ wings.