Threats of general strike in South Africa

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Tens of thousands of strikers brought Johannesburg to a halt on Wednesday in protest at rising electricity prices and living costs, as trade unions vowed to bring the economy to a standstill next month unless their demands were met.

By Tom Burgis in Johannesburg

Workers stayed away in four of South Africa’s nine provinces, closing mines, shops and factories, in response to a call from Cosatu, the powerful union federation, to protest against a 27.5 per cent increase in electricity tariffs for 2009.

In Johannesburg about 25,000 people marched on the head office of Eskom, the power utility. Underinvestment in Eskom by the government plunged the country into an electricity crisis earlier this year.

Zwelinzima Vavi, general secretary of Cosatu, said the demonstrators had gathered to “register their disgust at the spiralling cost of living”.

He demanded the government overturn most of the energy price rises agreed by the energy regulator and also address taxes on some basic food stuffs.

If it were not satisfied, the federation would hold a nationwide strike on August 6, Mr Vavi said.

But Keith Brebnor, chief executive of the Johannesburg Chamber of Commerce and Industry, said he feared “the international effect [of the strikes] on our reliability as a trading partner”.

Eskom said it recognised that “price rises affect the poor”, but in reality the state-owned utility has no room for manoeuvre.

Jacob Maroga, Eskom chief executive, told the Financial Times last week prices would have to rise still further to curb demand and to help fund its R300bn ($40bn, €25bn, £20bn) investment programme to restore generation capacity to adequate levels.
“If inflation and interest rates go up, everything goes up, from a glass of water,” said Nombulelo Mehlomakhulu, a state attorney taking part in the protest. “The basic standard of living is unbearable.”

Seeking to counter inflation that hit 10.9 per cent in May, the central bank has raised interest rates by 500 basis points over the past three years to 12 per cent.

Jeff Gable, head of research at Absa bank, predicted inflation could fall by as much as 6 percentage points next year from a peak of 13 per cent, allowing cuts to the cost of borrowing of 200-250 basis points and relieving animosity to the South Africa Reserve Bank’s inflation-targeting mandate.

But Patrick Craven, Cosatu spokesman, said the union “strongly opposed” inflation targeting and would push the ruling African National Congress and the South African Communist party – its partner in the governing alliance – to review their monetary policy stance.

Cosatu’s influence has increased with the rise of Jacob Zuma, its ally, to the leadership of the ANC and in all likelihood to the presidency next year.

The Financial Times

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