6 things Herman Mashaba thinks SA must do to deal with economic crisis after lockdown

The People's Dialogue leader Herman Mashaba says SA will face an economic crisis like never before after emerging from the Covid-19 crisis.

On Wednesday, while expressing concerns over the pandemic, Mashaba said SA was facing two very real crises: a health crisis and an economic crisis.  

“We do not have the luxury of ignoring this or dealing with one crisis at a time. We have to be proactive to prevent an economic collapse,” he said.

Mashaba said discussions about the economy in the current times of a health crisis should not be ignored, adding that junk status was a reminder that the country could not afford to ignore what was coming.

“News on Friday that Moody’s has downgraded our sovereign rating to junk status was a stark reminder that we cannot forget that when we emerge from this health crisis, we will face another, larger crisis: an economy that will need resuscitation,” said Mashaba.

“I truly believe that we will get through this, but only if we are willing to have some difficult conversations.”

Mashaba has proposed a six-point plan that the government should consider to solve SA’s economic crisis after Covid-19 lockdown:

Stimulus package

Mashaba called for an urgent stimulus package to prevent the closing down of various industries and jobs bloodbath.

“Government should finance this package by freezing unspent funds allocated to low-priority projects at local, provincial and national government levels,” he said.

“This stimulus package should be equally funded by a drive to reduce the public sector wage bill by 25%.”

Relax labour laws 

Relaxing labour laws will encourage companies to retain more people, said Mashaba.

“Labour laws need to be relaxed across the spectrum. For decades, our labour laws have favoured the employed at the expense of the unemployed,” he said.

“Immediate legislation relaxing the Labour Relations Act will encourage companies big and small to hire or retain more people. This would immediately reduce the impact of the bloodbath that is likely to follow the lockdown.”

Very low interest rate loans 

“Small and medium-sized businesses must be given access to very low interest rate loans after the lockdown. That will allow them to recover from their loss of operations and get back on their feet without having to retrench,” said Mashaba.

Privatise failing state-owned entities

The government should announce immediate plans to privatise failing state-owned entities.

“SAA should be sold — more like given away. Eskom should be privatised through a deal that contains annual cost increases for consumers,” said Mashaba.

Three-month income grants 

Income grants for three months should be provided to informal traders and micro-enterprises who have lost access to their daily income during the lockdown.

“These are people who support entire families and support upstream economies of small-scale food production.”

Reconfigure the national budget

“We cannot afford to operate under the business-as-usual budget adopted in February this year. We need financial reforms,” said Mashaba.

“The kind of reforms that will be unpopular within the ANC and its tripartite alliance partners.”