Finance minister Pravin Gordhan has raised concern about the country’s labour market which may record low economic growth like other countries of the world.
The Finance minister was speaking at a business conference in Sandton where he said he believes that the country will avoid a recession though a low economic growth is expected for the rest of the year.
Gordhan reiterates his concern about the country’s strained labour market which has been plagued by strikes and increasing inflation wage demands, he however noted that the economy will avoid a recession this year but growth remains low along with the rest of the world.
The minister’s statement came at a time when wage negotiations are taking place in the power, automotive and mining sectors with initial demands ranging from 13 to 20 percent – well above inflation which currently stands at 6.3 percent.
The Reserve Bank and International Monetary Fund have lowered their growth forecasts for this year while the National Treasury is expected to lower its forecast in the October budget.
Meanwhile, government plans to address policy uncertainty, particularly in mining and land legislation. Pravin said this approach will help make good difference in sectors like mining companies.
The minister also noted the need to “stabilize” the mining sector despite the still-weak commodity prices. He also said while debate over SA’s energy mix continued, it was fit to question whether the energy grid would cope or have enough power to supply the economy once economic growth started hitting levels of about 3% or 4%.
Analysts are of the view that Eskom can meet current energy demand only because demand and economic growth are low.
On the labour environment, Gordhan told delegates that government, business and labour were “getting closer” to an agreement over a national minimum wage and its implementation.
On wage negotiations, Gordhan said both employers and workers had learnt from past experience the damage that strikes did to economic growth and jobs, and there was a need for parties to find each other “sooner rather than later” where wage agreements were concerned.