A worker primes the body shell of a BMW AG X3 sport utility vehicle (SUV) on the production line at the BMW South Africa Pty Ltd. Rosslyn plant in Midrand, South Africa, on Thursday, Aug. 30, 2018. South Africa's government is close to agreeing to new tax breaks for international carmakers including Toyota Motor Corp., Ford Motor Co. and BMW AG in return for initiatives to boost jobs and exports, according to Trade and Industry Minister Rob Davies. Photographer: Stefan Kleinowitz/Bloomberg
JOHANNESBURG - South African President Cyril Ramaphosa urged businesses to place a moratorium on job cuts as his administration tries to contain the fallout of a recession and institutes measures to reignite growth.

The continent’s most-industrialized economy contracted 0.7 percent in the second quarter, after shrinking 2.6 percent in the previous three months, as agricultural output slumped. With elections scheduled for next year, the downturn is a setback to efforts by Ramaphosa and the ruling African National Congress to reverse a decline in support during former leader Jacob Zuma’s scandal-marred, nine-year tenure.

“In our recent meeting with business, we called upon them not to be too hasty to retrench workers, particularly in these difficult economic conditions,” Ramaphosa said in a speech to the Congress of South African Trade Unions’ national congress in Johannesburg on Monday. “We also said that they should try everything they can to avoid retrenchments, and in a way put a moratorium on retrenchment so that we can rise from these challenging economic conditions.”

While the government and unions must discuss ways to ensure the civil service and public wage bill are better managed, there are no plans to fire state workers en masse, according to the president. Cosatu, the country’s biggest labor group, is part of the country’s ANC-led ruling coalition and is strongly opposed to jobs cuts. The unemployment rate of 27.2 percent is near a 15-year high.

Ramaphosa reiterated that the government will unveil a stimulus package that will focus on increasing infrastructure spending, mining reforms and developing the telecommunications industry to stimulate growth and limit job losses.

“The economic challenges that our country faces have their roots in the structure of our economy,” he said. “We have seen a decline in infrastructure build and this is an area we believe we should focus on.”

- BLOOMBERG