Public Servants Association (PSA) members march past the Department Public Works and iInfrastructure along Madiba street in Pretoria, 10 November 2022, on their way to National Treasury. Photo: citizen.co.za/ Nigel Sibanda
The Public Servants Association (PSA) has condemned the decision of the South African Reserve Bank (Sarb) Monetary Committee to increase the repo rate by 75 basis points to 7% effectively.
The union said the move has resulted in a cumulative, whopping increase of 350 basis points since November 2021.
“The PSA has previously warned Sarb that these consecutive increases would quickly take us back to more than 10%, and it is thus not surprising that the current lending rate is 10.50%,” said the union in a statement.
“South Africans have not recovered financially from the effect of the pandemic, and the cruel move by the Sarb is deepening their crisis and ability to afford necessities.”
The union lambasted the Reserve Bank for “not serving the interest of South Africans”, saying trading has become more complicated and small businesses have to close down.
The union argues that rising interest rates are fuelling high unemployment and reducing tax-collection revenue.
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PSA says Sarb‘s monetary policy is “continuously failing to address South Africa’s triple challenge of unemployment, poverty and inequality.
“The PSA thus regards Sarb as a problem for society, and a review of its mandate and policy position is required to address the country’s challenges,” it further stated.
The union accused the Reserve Bank of only “serving banks” as aggressive interest-rate increases make the debt more expensive while increasing profits for commercial banks.
“Sarb is, unfortunately, taking its cue from the National Treasury in serving its masters and not the country’s desperate citizens.
“Western agencies such as the International Monetary Fund, which calls for the consolidation of the fiscal position, influenced Treasury to implement austerity measures that have severely harmed the country,” it said.
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Public sector employees have downed tools to raise wages in line with the inflation rate and are awaiting the government’s response to their list of demands this week.
They have vowed to heighten strike action should the state revert with an unfavourable response.
“Workers are getting below-CPI salary increases and finding it difficult to service their debts at high repayment rates.
“Workers are barely coping under economic hardship owing to ever-increasing prices of fuel, electricity, food and public transport coupled with stagnant salaries.”
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The PSA said municipalities were also affected as workers had to choose between paying for municipal services and buying food for their families.
“Sarb’s approach of an inflation-targeting policy is outdated, against the developmental agenda, and has proven hazardous for the country, with South Africa losing competitiveness in many industries.”
Traditionally, inflation targeting ignores essential objectives such as economic growth and unemployment as it is fixated on inflation-related goals, resulting in low growth in output and employment.
“Such an approach in a developing country is debatable.
“Sarb needs to review its approach to serve the interests of South African citizens and stop the constant financial attack on the working class,” concluded the PSA.
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