Impacts of Trade Unions on the South African Economy

“Trade unions in South Africa play a significant role in the economy. Trade unions have been active in responding to the fiscal policies of government. Unions argue that their proposals for the budget will increase economic growth and support job creation. Criticism of trade union views on the budget has focused on the affordability of these proposals, and on their impacts on business growth. Will trade union alternatives on the budget support economic growth and economic inclusion?”

1. Introduction

Trade unions played an important role in South Africa’s transition from apartheid in 1994 and continue to play a very public role in the South African economy (STEENKAMP, 2005). COSATU (Congress of South African Trade Unions) is the main trade union in South Africa that has actively commented (criticized and commended) on the national budget after its release (COSATU press statements, 2014). COSATU has affiliations with other unions in South Africa (NEHAWU, NUMSA, DENOSA) (COSATU, 2009) and collectively they have the bargaining power to influence government or corporates to give into their demands. This paper will examine key points in the statement on the national budget issued by COSATU and examine critically whether these suggestions made by the union would have the desired impacts on the South African economy should government decide to follow the proposed courses of action. The first point to be discussed in the fear that the South African economy is in austerity mode after a 2% year on year increase in national GDP (Trading Economics, 2013) and this increase is below real terms allowing for population growth (COSATU press statements, 2014). The second key point to be discussed is government expenditure, particularly the ...

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