FOCE-Implications of expulsion of NUMSA from Of Cosatu

Cosatu Opposing Interpretations Of Recent Political Developments, Especially Relating To A Possible Breakup

Key points

  • The decision by Cosatu to expel NUMSA from the Federation has raised all sorts of views about the economic and political implications, mostly negative, but some also positive. The environment remains very fluid and it is unwise at this early stage to draw definitive conclusions.
  • On the one hand, the breakup of Cosatu could cause individual unions to become more aggressive in their wage demands, with negative effects on employment creation and economic growth. In particular, one is concerned that those unions which have remained within Cosatu and the tripartite alliance are precisely those with whom the government is going to have to negotiate to restrict wage increases in order to reduce the budget deficit.
  • On the other hand, there is a view that the fracture of the alliance will allow the ANC the space with which to implement the National Development Plan (NDP) in a more unconstrained manner that might assist in promoting longer term economic growth.
  • However, as reflected in the turmoil in Parliament last week, stronger opposition to the ANC runs the risk of generating increased anarchy and the breakdown of law and order.
  • What has also been noticeable has been Cyril Ramaphosa's sharply increased involvement in a variety of contentious issues and the associated rise in his profile as a leader. Could this be a precursor to a change in leadership of the country which could theoretically improve the economic environment fairly dramatically.

Source : Econometrix, 18 /09/ 2014

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