Western Cape Business News

Send  Share  RSS  Twitter  28 Feb 2012

LABOUR: Strikes: It's Make Or Break


Recent Western Cape Business News

THIS year’s strike season in June and July could be a make-or-break event for the Government and its alliance partners, says Michael Bagraim, President of the Cape Chamber of Commerce and Industry.

The demands for double-digit wage increases for the public sector are already coming in. They follow recent increases well above the inflation rate and it is now clear that any further increases of this order are unaffordable.”

Bagraim said that at some point the Government would have to say a firm no and he believed it could and should happen this winter.

To give in to the demands once again will undermine the Budget and the country’s financial discipline. The Government will have to stand up to the unions. I’m afraid we are in for a massive strike season and something could break. There will certainly be great tension in the ruling alliance and the fault lines between the partners will be under great stress.”

He said the underlying problem was that the unions had grown too powerful and the balance of power between them and the Government had tilted in favour of the unions.

You can see this clearly in the Budget figures. A Unisa team of economists calculated that in the 2007/2008 tax year 54.8 percent of Government revenue was spent on government salaries, government debt and grants. The corresponding figure for this tax year is 69.1 percent!” he said. “Double-digit salary increases will push that figure to 70 percent.”

The Government had tried to meet Cosatu’s demands by increasing taxation and by borrowing while it shifted the costs of education, security, medical expenses and roads increasingly onto business and consumers, mostly those in the middle and upper income brackets. The problem was that there were only six million out of a population of 50 million who paid personal income tax.

The situation was becoming unsustainable and the Government had no option but to stand up to the unions and reject any increase above the inflation rate. “That will not go down well and we can expect a winter of discontent and worse,” Bagraim said.


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