Nov 15, 2023 Martlé Keyter, MISA, Motor Industry Staff Association, South African Reserve Bank (SARB) Monetary Committee,
MISA comment - Interest rates must fall to help the dire economy
The improved unemployment rate of 30.8% after 399 000 people were added to the workforce in the third quarter of 2023, will be eliminated on 1 December 2023 when the majority of the 921 000 matric learners enter the labour market if they can’t afford to further their studies.
“The South African Reserve Bank (SARB) Monetary Committee must start cutting interest rates at the next meeting on 23 November 2023 to stimulate the economy and to prevent further job losses. The repo rate increased with 4.75 percentage points to 8.25%, the highest level since 2009, to combat inflation. But now the impact on consumers and businesses have become devastating on the retail motor industry,” says Martlé Keyter, Chief Executive Officer: Operations of MISA, the Motor Industry Staff Association.
MISA represents more than 63 000 members. Last week MIBCO, the Motor Industry Bargaining Council, declared MISA the majority trade union in the industry.
According to Keyter dealerships and retail stores in the industry are suffering. “The disposable income of consumers are absorbed by the impact of load shedding, fuel prices, food prices, inflation and interest rates. The number of consumers who had cash available to spend on vehicles, or on the maintenance of their vehicles, rapidly declined.
“Consumers who have to rely on financing, struggle with bad credit ratings because of all their debt,” says Keyter.
According to Statistics South Africa the unemployment rate is now 31.9%, for the first time dipping below 32%, since the third quarter of 2020. Dr Roelof Botha, Economic Advisor to the Optimum Financial Services Group, says jobs were created in the financial sector and in construction, but industries like the retail motor industry and property industry, are still under severe pressure. “Another 300 000 jobs could have been created if SARB lowered the interest rate. I believe SARB is being too conservative in its approached and it is destroying jobs.”
Botha also said that the improved employment rate is not so great compared to South Africa’s current population of more than 60 million, according to the 2023 census. “The accuracy of the census is questionable, even more so after the Minister of Home Affairs, Aaron Motsoaledi, admitted that South Africa has no idea how many illegal immigrants are in the country. We could add another 6 million to the population of 60 million. That means we are making very little progress,” says Botha.
He predicts that the unemployment figure will worsen in the first quarter of 2024, with the Matric Class of 2023 joining the masses. Experts predict violent strikes and chaos if the National Student Financial Aid Scheme (NSFAS) does not get its payments in order. NSFAS refuted claims that it is on the brink of collapse, after students did not receive payments. NSFAS is a Government student financial aid scheme to help pay more than 1 million students for the cost of their tertiary education after finishing high school.
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