Thanks for reopening the economy, but we need more public investment - Cosatu

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President Cyril Ramaphosa on Saturday announced lockdown restrictions would be eased to level 2. (GCIS)
President Cyril Ramaphosa on Saturday announced lockdown restrictions would be eased to level 2. (GCIS)
  • President Cyril Ramaphosa has announced the easing of lockdown restrictions to Level 2.
  • Cosatu has, however, called for more drastic interventions, such as the injection of new money to support the economy's recovery.
  • B4SA and beermaker SAB have pledged their support in aiding economic recovery.

The reopening of the economy under Covid-19 lockdown Level 2 needs to be accompanied by more drastic interventions – namely the injection of new money through public investment, according to the Congress of South African Trade Unions (Cosatu).

The labour federation has welcomed President Cyril Ramaphosa's announcement on Saturday that lockdown restrictions would be eased to Level 2, but called for action to assist households and firms hard hit by the economic impact of the pandemic.

"This lack of an economic stimulus by government amidst depressed private capital investment will continue to plunge and trap the economy into what is becoming a serial stagnation," said Cosatu's parliamentary coordinator Matthew Parks.

"The country needs an interventionist state that is ready to play a strategic role in shaping key sectors of the economy, especially the ones hardest hit by the crisis. This calls for an increase in public investment in the economy – in a manner that instills the efficient use of our limited resources," he added.

Cosatu wants government to provide extended financial support to employees through the UIF Covid-19 TERS fund, review the lending criteria of banks to support struggling firms and to allow further loan deferrals and debt restructuring for businesses and consumers. The labour federation also called for National Treasury to allow workers who have lost their income to access a limited portion of their pension funds during the crisis.

Business for South Africa (B4SA) has said the reopening of the economy must be accompanied by interventions to "rebuild" it into one which achieves inclusive growth. The organisation has made submissions on the economic recovery strategy to the National Economic Development and Labour Council.

"We collectively commit to the resumption of greater levels of economic activity. We also call for the urgent resolution of outstanding economic policy issues that stand between us and greater prosperity for all South Africans, while also calling for decisive action to combat crime and corruption," said Martin Kingston, B4SA's SteerCo chair.

"We will work tirelessly with our social partners to develop a better, more just and equitable South Africa, where all can achieve their potential," said Kingston.

B4SA has also urged everyone to remain vigilant in observing the health protocols of social distancing, wearing masks and sanitisation to limit the transmission of the virus.

Under lockdown Level 2, the alcohol and cigarette sales ban will also be lifted. Restaurants will be able to serve alcoholic drinks under strict conditions.

The lifting of the ban on cigarette sales came as the Supreme Court of Appeal on Friday granted the Fair Trade Independent Tobacco Association (FITA) leave to appeal the ban under the current Covid-19 lockdown regulations. The court ruled that if FITA does not proceed with the appeal, it will bear the cost of the process, Fin24 previously reported.

Both sectors have warned of a jobs bloodbath due to the sustained ban, with the South African Revenue Service having estimated in April that billions in revenue could be lost due to the ban on alcohol and cigarette sales.

Beermaker SAB welcomed the lifting of the alcohol sales ban given the impact on the more than one million livelihoods dependent on the alcohol industry's value chain.

"Lifting of the prohibition on the sale of alcohol will come as a welcome relief for our business and industry, and the million livelihoods who depend on us," said Zoleka Lisa, vice president of corporate affairs at SAB. 

"We must now focus on economic recovery as we chart our way into the future," Lisa said.

During his address on Saturday evening, Ramaphosa said the further easing of restrictions presented the country with "the greatest opportunity since the start of the pandemic to breathe life into our struggling economy".

"Even as we open up economic activity, it will take a long time for industries and businesses to recover, and there is much work still to be done."

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