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COSATU statement on the latest GDP figures
The Congress of South African Trade Unions takes note of the latest gross domestic product figures released by the Statistics South Africa that shows that South Africa's economy grew by 0.2% in the third quarter of 2016, down from the growth of 3.3%.
According to the Stats SA report, the main contributors to the GDP growth rate were the mining and quarrying industry; finance, real estate and business services; and general government services, the stats body said. Mining and quarrying increased by 5.1%, largely as a result of higher production in the mining of 'other' metal ores, in particular iron ore.
Four industries contracted in the third quarter however, namely agriculture, forestry and fishing (-0,3%); manufacturing (-3,2%); electricity, gas and water (-2,9%); and trade, catering and accommodation (-2,1%). It is concerning for COSATU that the agriculture, forestry and fishing industries has been in decline for seven consecutive quarters.
The impact of the drought in the shrinking of the agricultural sector is deeply worrying and raises questions about food security in the country. The water shortage problem, as a result of drought calls for urgent action from all stakeholders. We also need to dismantle the cartels that are dominating the agriculture sector in this country.
We will not create the necessary jobs if the majority of South Africans are denied an opportunity to participate in the economy because they are landless. We also need to ensure that we have a state bank that will help with government's developmental agenda.
The electricity, gas and water supply industry also shrank in size and the manufacturing sector flat lined. All the sectors that have grown have seen some very marginal growth and this does not bode well for employment creation and poverty reduction. The contraction of the electricity and gas supply industry makes urgent the need for government to invest and encourage investment in the renewable energy sector. This will not only allow the working class and poor to gain access to clean, affordable and reliable energy but will create much needed jobs and help in stimulating the economy.
The stagnation of the manufacturing sector also calls for government to use incentives like subsidies, quotas and tariff hikes to encourage investment in the local manufacturing industry.
The fact that the one sector that saw the biggest increase in growth was the financial sector shows the structural problems in the SA economy, and the need for a far bolder programme of diversification and industrialisation. This validates the case that COSATU has been making that there is deliberate financialisation of our economy. This is not the solution and will have adverse effect on our overall economy long term. We need to grow the economy in areas that create decent and sustainable jobs.
It is worrying that the latest Midterm budget policy statement seemed to be entrenching an austerity mode at a time, when we need economic stimulation. This is made worse by the fact that big business continues to be on an investment strike and they also continue to take their profits out of the country. We are on our way back to the earlier problem of a jobless growth crisis. Government's plans to create 5 million jobs have failed miserably and we need a new plan.
These GDP numbers are proof that those in charge of our economy have lost the plot and are just feeling their way in the dark.
The reports that big business is hoarding an estimated cash of close to R600 billion on deposits in South African banks; also proves that they are not invested in the future of this country.
The infrastructure development programme should help in strengthening local industries by increasing local content of the infrastructure development projects. Now more than ever, government needs to intensify its investments and infrastructure drives in the economy. Job creation is the only way to spur and sustain economic growth and to ensure the redistribution of wealth in a meaningful way.
COSATU reiterates its call for government to aggressively address the legacy of concentration and domination of the South African economy by a few monopolies. There is little space for SA small firms to succeed and create jobs for the 9 million unemployed workers because the economy is dominated by cartels.
Government should also help small businesses to deal with the high administered prices such electricity, transport costs, non- availability of cheap finance. We also need to see urgent change in the country's contractionary macroeconomic policies, which stifle the impact of industrial policy.
Issued by COSATU
Sizwe Pamla (National Spokesperson)
Tel: +27 11 339-4911 Direct 010 219-1339
Mobile: 060 975 6794