Adds particulars, background, Fitch quotes CAPE TOWN, Oct 2
Adds particulars, background, Fitch quotes
CAPE TOWN, Oct 29 (Reuters) – South Africa’s plan to freeze public sector wages, introduced by the finance minister in a finances speech, will face opposition from labour unions, scores agency Fitch mentioned on Thursday.
The success of the plan “will rely crucially on troublesome negotiations with public sector commerce unions,” mentioned Fitch Rankings in an in depth commentary after publishing a quick assertion late final night time.
Finance Minister Tito Mboweni pledged on Wednesday to freeze the wages of the nation’s 1.three million civil servants as a part of the federal government’s plan to slender a yawning finances deficit and produce down debt.
Freezing civil servants’ salaries will put the governing celebration on a collision course with its labour union allies. Public sector unions have already taken the federal government to courtroom for failure to pay wage will increase due in April.
“Tensions throughout the governing African Nationwide Congress can even hamper policy-making and exceptionally excessive inequality raises social strain for extra spending,” Fitch mentioned.
Fitch, which charges South Africa’s debt at BB with a damaging outlook, added: “Regardless of the Financial Reconstruction and Restoration Plan launched by the president, Cyril Ramaphosa, in mid-October, development will stay weak.”
Treasury reduce its development forecasts for 2020 to a 7.8% contraction, whereas the finances deficit is seen widening to 15.7% of GDP.
(Reporting by Mfuneko Toyana Enhancing by Promit Mukherjee and Jonathan Oatis)
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