Satawu says rising interest rates will further hamper wage negotiations

Thomas McLachlan

Thomas McLachlan

The South African Transport and Allied Workers Union (Satawu) has called on the reserve bank to hold off on increasing interest rates again next month because it would seriously hamper wage negotiations for the year.

"Wage bargaining will be more difficult, more protracted and result in more strikes this year," Satawu general secretary Randall Howard said yesterday.

He said the current wage dispute in the road-freight trucking industry, where employers were offering 6,5percent and unions were still demanding 12percent, was "a direct example of the affect the four interest rates hikes decided by the reserve bank last year".

The bank's last rate hike last month brought its key repo rate - the rate at which it lends to banks - to 9percent.

Howard said interest rate increases devalued each "rand in workers' pockets". Banks and retailers needed to be more disciplined with regard to offering credit, he said.

Federated Unions of South Africa (Fedusa) spokesman Dennis George said his union agreed with the sentiment. The only people benefiting from recent interest rate hikes were "commercial bank shareholders".

The poor were squeezed harder when paying off their home loans as banks raised their prime lending rates in line with the reserve bank, George said.

Standard Bank's chief economist Goolam Ballim said that he did not expect further rate increases in the current interest rate cycle. There was even some scope for monetary policy easing towards the end of the year, because of a slowing down in the economy.