SA must pop the bitter pill

2013-09-01 14:00

It is not difficult to get the impression that government believes that the mere act of reassuring investors, or creating a positive dialogue, will be enough to turn sentiment in favour of South Africa.

South Africa is certainly at the mercy of global events that play no small part in some seriously worrying local economic consequences – like a spiralling petrol price and the decline in the rand’s exchange rate, both of which result in higher prices and put further strain on a fragile economy.

But to assume diminished responsibility for our economic woes is to ignore numerous local issues that are the responsibility of government, the private sector and labour to sort out – and quickly.

Economic growth, although recorded recently at 3%, reflected a one-off recovery in manufacturing that belied its underlying weakness.

Producer inflation figures looked ominous.

But the glaring problems this week were wage talks and strike action.

It was reported that since 2000, wages have risen by 53% in real terms, while productivity dropped 41%.

By Tuesday, much of the mining industry will be at a standstill, while the motor industry, construction, airlines, petrol stations and other sectors are on a knife’s edge.

Higher-than-inflation wages, which are being demanded, will increase inflation, while lost working days due to labour issues continue to cripple critical economic sectors.

The hardest statistic to swallow is that a huge proportion of adult South Africans do not work.

Positive dialogue may help, but it is not the answer.

Urgent action to boost investment is. Finance Minister Pravin Gordhan called this week for government and mining industry stakeholders to work together to attract more investment.

But the reality, as we anticipate this week’s strikes, does not reflect any attempt to do so.

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