High wage demands could lead to job losses

Shaun de Jager, the South African Reserve Bank's macro models unit divisional head
Shaun de Jager, the South African Reserve Bank's macro models unit divisional head
Image: Werner Hills

If trade unions demand high wages for their members, it could lead to massive job losses.

This was the warning from the Reserve Bank's macro models unit divisional head, Shaun de Jager.

De Jager was speaking at the Reserve Bank's monetary policy review session at the Boardwalk on Tuesday.

De Jager, alongside the bank's forecast unit economist and lead economist Rowan Walker, was addressing members from various investment clubs and sectors on the Reserve Bank's monetary policy forum.

The bank is hosting forums where the role of the Reserve Bank is explained.

De Jager, who was responding to questions, said labour unions were becoming more cognisant of the reality of the economy.

"Unions have started to sympathise more with what is happening and are not demanding high wages," he said.

"If they demand high wages, something's got to give and you will have job losses, and this is where the trade wars come in.

"You have a case of the haves and the have-nots.

"If you're starting to demand high wages, just be aware that you might have job losses as well."

De Jager also commented on finance minister Tito Mboweni's economic strategy, saying it was a good attempt at curbing expenditure.

"What he was trying to do here was [cut] back on some of the expenditure."

He was also trying to make the point that you don't get anything for free.

"We are going to have to start paying for things, especially municipalities that are sitting with massive debts to Eskom," De Jager said.

He explained that Mboweni – who previously served as Reserve Bank governor – had, with his economic strategy, considered the monetary policy.

"I also think the minister is trying to solve what is happening on the salaries side because that is where the expenditure [of government] is going – as well as to the state-owned enterprises," De Jager said.