Wednesday, November 25, 2009

COSATU Calls For Overhaul of South African Economy

Cosatu calls for overhaul of SA economy


The Congress of South African Trade Unions (Cosatu) said on Wednesday it wanted a total overhaul of the economy and favoured a rand exchange rate of about 10 to the dollar to boost the country's weak manufacturing sector.

"We are on a completely disastrous path ... We need a change. We need an exchange rate that will go back to 10 [against the dollar] for South Africa's manufacturing sector to be given another breath of fresh air," Cosatu general secretary Zwelinzima Vavi told reporters.

South Africa's rand has gained about 25% against the dollar so far this year and was trading at about 7,40 to the greenback on Wednesday.

The government and central bank have warned that the strength of the currency may be harming parts of the economy, particularly manufacturers that have been shedding jobs.

The economy has lost almost a million jobs this year after slipping into its first recession in nearly two decades at the start of 2009. It emerged from recession in the third quarter, thanks partly to an improved performance from factories as other countries also recovered from the global downturn.

Cosatu, an ally of the African National Congress, has long demanded a weaker currency and has also called for the South African Reserve Bank to lower interest rates to help boost the economy and for a more expansionary fiscal policy.

"We're calling for total overhaul of the economy of South Africa ... We've inherited an economy that was designed to serve the interests of a small minority. We have not developed an industrial strategy," Vavi said.

Fifteen years after the end of apartheid, Africa's biggest economy is still dominated by white people despite government efforts to redress apartheid-era economic imbalances.

Vavi said South Africa believed too much "in the rules of the market". He called for a "government that realises we're in a deep, deep structural crisis, not a government that is a prisoner of the markets".

However, he said the federation was encouraged by what appeared to be a more cooperative stance from the central bank since Gill Marcus took over as governor earlier this month.

The country's ruling alliance -- the ANC, Cosatu and South African Communist Party -- agreed in November that the central bank's mandate should be broadened to look at other issues such as growth and jobs, rather than just inflation in deciding on interest-rate adjustments. -- Reuters

Source: Mail & Guardian Online
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