South Africa Not Planning Mass Layoffs to Fight Recession, Says Ramaphosa

JOHANNESBURG (Reuters) – South Africa’s President Cyril Ramaphosa pledged on Monday there would be no mass layoffs of public sector workers as the South African government considers various ways to pull the economy out of a recession that has rattled the rand and investor confidence.

The economy slipped into recession in the second quarter for the first time since 2009, data showed in August, a stinging blow to Ramaphosa’s pledge to revive the economy and reduce record-high unemployment after a decade of stagnation.

In June, the National Treasury said it was considering layoffs and early retirement packages for staff in the public sector to avoid breaking its pledge to cut spending after unions clinched above-inflation wage increases.

“The mass retrenchment of public sector workers is not under consideration,” Ramaphosa said at trade union federation Cosatu’s electoral conference in Johannesburg.

“The context of slow economic growth and weak revenue collection means that expenditure on other critical things will suffer … but we need to address this in a way that does not put the livelihoods of public sector workers at risk.”

The contraction in the economy sent the rand tumbling and triggered warnings from ratings agency Moody’s that the country would struggle to increase revenue and deliver on a promise to cut spending and public debt.

South Africa needs faster economic growth to reduce its 27 percent unemployment rate and alleviate poverty and inequality, both of which stoke instability.

The ruling African National Congress has made repeated pledges to improve the economy. Unemployment is a key concern for voters ahead of elections next year.

(Reporting by Mfuneko Toyana; Editing by James Macharia)