The Congress of South African Trade Unions (Cosatu) believes that the government should step in and take action against the current surge in fuel prices. The increase of R1.71 in petrol, R2.84 in diesel and R2.78 in paraffin per litre spells troubling news for all South Africans, but its impact on poorer households will be especially severe.
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South Africans are already grappling to make ends meet, and this rise in fuel prices is likely to increase inflation, which had been on a declining trend until now, potentially prompting the already vigilant Reserve Bank to once again raise the repo rate.
Cosatu released a statement on Monday, 4 September, which read that poor households are already struggling to survive and that an increase in paraffin prices will leave many poor families worse off.
‘This increase in fuel prices will create a level of hardship for a society that is already suffering from high levels of unemployment and stagnant or declining real wages. Low- and moderate-income families are going to be plunged further and further into debt because their wages are now inadequate to afford the basic amenities.
‘The National Credit Regulator’s reports confirm workers are drowning in debt. This, coupled with electricity prices, food prices and rising interest rates, will make it even harder for workers to take care of their families. It will push thousands to default on their loans and risk losing their homes, cars and other possessions. These higher fuel prices drain the purchasing power of most South Africans and retard economic recovery, ‘the statement read.
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Cosatu questioned the government’s reluctance to publish the research findings regarding the viability of implementing a fuel price cap in South Africa, as well as a thorough examination of the fuel price structure aimed at reducing the substantial taxes that currently account for 28% of the total fuel price structure. This unmet promise was originally put forth by former Minister for Energy Jeff Radebe in September 2019 and reiterated by the current Ministers for Mineral Resources and Energy Gwede Mantashe, and Finance, Enoch Godongwana, in April 2022.
Although there is limited government control over the fluctuating price of oil in international markets, it should follow the example set in 2022 by easing the burden on commuters and the economy through a reduction in fuel taxes. This action would also contribute to reducing inflation and easing the constant temptation for the Reserve Bank to raise the repo rate, which could further impoverish workers and stifle economic growth.
Cosatu said the Department of Transport should take action to place the Road Accident Fund (RAF) under administration while reintroducing the RAF and Road Accident Benefits Scheme Bills in Parliament. These steps are crucial for addressing the issues within the RAF and decreasing its reliance on disproportionately high increases in the fuel levy.
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The trade union federation believes the government should make adjustments to social grants in the Medium-Term Budget Policy Statement, particularly the SRD Grant, in order to shield its recipients from the repercussions of rising prices.
Cosatu added that the Department of Transport, in collaboration with the Passenger Rail Authority of South Africa (PRASA), must expedite the process of reopening the Metro Rail lines that have remained closed since the onset of the COVID-19 pandemic, and the government should extend subsidies for public transportation and make substantial investments in the country’s transportation infrastructure.
‘This unrestrained escalation in the cost of living will poison the upcoming wage negotiations and will automatically push our affiliates to demand above-inflation salary adjustments for our members.
‘It is in the best interest of the government to find a workable solution to this ever-present challenge, the statement concluded.
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