Cape Town - South African workers need to be responsible in their wage demands if they want to protect jobs, the country's finance minister said on Wednesday, as he offered a medium-term budget amid lower expectations for growth in Africa's most advanced economy.
The labour-intensive mining sector faces thousands of potential job losses as lower metals prices lead companies to downsize.
“We are calling on all sectors in negotiating for better salaries to take into account that employers still need to be able to create jobs,” Nhlanhla Nene told Reuters after delivering the budget speech.
Electricity shortages, weak business confidence and low household demand had constrained growth, he said.
Nene is trying to contain spending as it becomes tougher to raise revenue. The government lowered its economic growth forecasts for this year and the next two.
The strain is visible. A campaign by university students to keep on hold their part of tuition fees at state institutions is the most recent example.
South African riot police fired stun grenades after hundreds of students rushed into the parliament precinct in Cape Town to try to disrupt the reading of the interim budget.
Fitch rates South Africa at BBB with a negative outlook and may lower it a notch if Nene fails to impress in his October 21 medium-term budget policy statement.
“What matters for the ratings agencies is our response as a government in addressing these challenges,” he said, referring to student demands to block tuition fee increases.
The recent downgrade to junk of Brazil, South Africa's emerging-market peer, is a warning that ratings agencies will punish signs of prolonged budget deficits. Fitch warned on September 8 of the risk of a downgrade for South Africa, citing largely negative news this year.
The reading of the budget was delayed as the opposition Economic Freedom Fighters asked for a postponement to allow the assembly to address the ongoing university protests over plans to raise tuition fees by up to 11.5 percent next year.
Nene said a process to take money from other skills development funds to be used in university education was already under way, but did not elaborate.
“I was determined to get it done even if it meant just standing on the podium and just tabling the documents without the speech. I would have settled for that,” Nene said.
“I find it strange,” Nene said. “It shows lack of understanding from some of the parliamentarians of the parliamentary processes and how critical the tabling is in order to allow for what they are calling for.”
REUTERS