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Cosatu calls for $53bn stimulus plan

Ramaphosa will address the nation later on Tuesday on a new set of social and economic interventions.
Image: Moneyweb

South Africa‘s largest trade union federation Cosatu on Tuesday urged the government, companies and financial institutions to fund a roughly R1 trillion ($53 billion) economic stimulus plan to cushion the blow of the coronavirus pandemic.

Cosatu is one of the main partners of the governing African National Congress and sits on the National Economic Development and Labour Council, which President Cyril Ramaphosa has been consulting on ways to mitigate the impact of the virus.

Ramaphosa will address the nation later on Tuesday on a new set of social and economic interventions, after imposing one of the strictest lockdowns on the continent late last month to try to contain the spread of the virus.

Africa‘s most industrialised economy has the highest number of confirmed cases in sub-Saharan Africa, at 3 300, with 58 deaths, as of Monday.

Cosatu parliamentary coordinator Matthew Parks said the group’s stimulus plan would help prevent a massive economic contraction and resultant unemployment, which was already running at 40% by a broad definition before the coronavirus crisis.

“We need a massive stimulus plan which can’t just be public funds. From the government side, there could be tax interventions, a scaling-up of social grants, but private firms including the banks should match every cent,” he said.

“If you do a meek stimulus plan it gets you back to 40% unemployment. We need something on the scale of the Marshall Plan after World War Two.”

Parks said raising the budget deficit beyond a 6.8% of gross domestic product (GDP) projection in February was the lesser of two evils, given the risk that half the country could be out of work without appropriate action.

A spokeswoman for Ramaphosa did not immediately respond to a request for comment.

Some business leaders told Reuters they agreed that there needed be a significant increase in stimulus measures, but thought the figure of R1 trillion, equivalent to roughly 20% of South Africa‘s 2019 GDP, was too high.

The government may also be wary of allowing a steep increase in state expenditure at a time when it is grappling with credit rating downgrades and higher borrowing costs linked to the coronavirus crisis.

COMMENTS   16

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Dream on.

It is a reason to judtify the 8% increases they will ask for while the private sector will look at 2% if lucky ..their profits down due to lockdown…the drop in govrnments income i.e. GDP do not influence the increase the unions wants…the unions won the 1st battle with their demands from SAA negotiations..at the end who is going to be the losers just because the unions do not understand how the economy works..time to vote in union leaders with brains and common sense

Go to the IMF….they will control the purse strings properly

I assume this is the part where they live up to “injury to all”.

In the meantime, booze and smokes tax is lost. When it is needed most.

I am calling for a $ 50 Billion in austerity programs.
– Close, liquidate or sell most SOEs.
– Cut salaries of senior Civilservants with 60% and the rest with 30%. Release 30% of all goiv employess of their duties.

You obviosly has years of experience, a degree or more and understand economics…cut the dead branches that leach on our tax moneyabd let them go work for their money. Will be new experience for most

The jobs get less, cosato (small caps intended) on the decline, not even an essential service as per gubberment 🙂

If they do not want us to go to the IMF, than how else will we get that money. The other alternative is that COSATU has a lot of the contributions sitting in invetsments, now is the time to show your commitments to the people of this country when its most needed, use those funds to stimulate the economy so taht we do not need to create further debt.

Hopefully funded by all the surplus funds COSATU has been accumulating by overcharging their members. Seriously, people need to know what unions charge because most workers could fund a decent retirement with this money. Ask yourself, if joining a union is a choice why do you never see unions promoting their fees and benefits.

Stimulus means the trough is empty. Thieves.

Not worth commenting on anything from these communist Thugs : Let them sprout on !

There’s a difference is wanting jobs and wanting money.

They don’t want a loan. They want to print money.

Cosatu represents a small minority of a few hundred thousand workers – holding the other 56 million people ad ransom with outdated socialist policies – with no political accountability, by not standing as a party on their own.

Also, when is the Competition Commission going to investigate them for their monopoly on labour – and then fine then 10% of all workers salaries combined!

End of comments.

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