SA striking itself into poverty

ohannesburg – The number of strikes is bringing South Africa to a crossroad, and the traffic light is dead as the power remains off, warned economist Mike Schüssler in an opinion piece written for TreasuryOne.

"This is not a fantasy of some or other futurist, but is clear in economic growth performance numbers over the last two or three years," he said.

In the first six months of 2014 the country has lost about 8 million man days.

"This is the highest start ever and the biggest effect on the private sector and economic growth by far," said Schüssler.

Over 7.4 million work days have been lost by striking workers in the platinum sector, but more than 5.2 million other work days have been affected by the strike.

In other sectors strike days lost are heading for 300 000, not counting Numsa intending to take 175 000 metal workers on strike.

Previous Numsa strikes lasted for three and four weeks in two subsectors in the motor vehicle industry.

"Other economic data such as negative real rates for 30 of the last 32 months and huge government deficits to support growth are having little effect," said Schüssler.

"The weak rand, as we pointed out before, has meant little as real structural issues keep the economy from growing, namely power, water, transport linkages, education and too few entrepreneurs."

negative real interest rates are back in the saddl

It seems to him the penny has not quite dropped as slogans and myths still make the debate in contrast to the harsh reality.

"Slogans are the life blood of getting political support in South Africa, but they do not put bread on the table. The boogeymen many a politician has put out there is not the reason for the slow growth, low employment and huge poverty," said Schüssler.

"In most cases, it is the opposite of what is needed."

Using only data available until the beginning of June, strike data show that SA now has its highest five year average ever.

Strike days lost

"Economic growth is undermined by strike action, and government seems powerless to put a stop to this increasing trend after a decade of more peaceful industrial relations," said Schüssler.

"Clearly South Africa is striking itself into a low growth trap and increasing poverty and inequality. Nobody hears the actual poor as poverty has no real voice and quietly the real money seeks other alternatives."

He said a country cannot strike itself rich.

"It can, however, inflict much damage and the poverty and inequality out of this action means that political stability will be at risk."

Schüssler said SA is striking itself out of growth into recession.

Source: http://www.fin24.com/Economy/SA-striking-itself-into-poverty-20140605

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