The Gross Domestic Product (GDP), which we have come to understand as the conservative measure of the value of all products and services produced, for quarter 1 of 2022 has been released. In this quarter (1st quarter, 2022), the statistics shows that the GDP grew by 1.9%, continuing a weak trajectory of quarter 4 2021 and affirming the low growth projections economists have made.
The industries that contributed to growth include manufacturing, whose output value increased by 4.9%, and constitute 0.4% to the GDP growth; trade, accommodation and catering industry by 3.1% (0.4%); personal services by 1.1% (0.2%); transport, storage and communication by 1.8% (0.1%); finance by 1.7% (0.4%) and government services by 1.4% (0.1%).
Demand, investment and growth
Though marginal, the sustained growth in trade, accommodation and catering can be linked to two factors: the increased household expenditure, and the easing of lockdown levels starting in quarter 4 of 2021.
Many organisations including trade unions returned to physical meetings taking advantage of government’s opportunistic easing of lockdown levels to allow campaigns for local government elections. In anticipation of the 4th wave of Covid-19 in the fourth quarter of 2021, organisations rushed to hold their important structural and strategic meetings such as congresses and conferences before any lockdown which were looming at the time. The rush to hold these meetings continued in 2022, leading to it dubbed as the year of conferences/congresses.
This, and many other physical activities that were allowed as a result of the eased lockdown and subsequent termination of the Covid-19 lockdown, apparently boosted the consumption of services and goods in the accommodation and catering sector.
The consumption behaviour of households on consumer goods seems to have declined marginally in this quarter compared to the fourth quarter of 2022. Despite this marginal decline, it remained largely positive.
Given a decline in incomes of working class people, including retrenchments which led to loss of income altogether, the most probable account for the improved expenditure of households on durable goods in quarter 4 of 2021 and quarter 1 of 2022 is the R350 of the Social Relief of Distress Grants (SRDG) and the mass employment of unemployed youth through the Presidential Youth Employment Initiative (PYEI). The beneficiaries of this schemes spends directly into the economy.
If the SRD Grant were to be increased to R1 500 as per our demand, it means household expenditure on durable and non-durable goods is going to change significantly. In the event that manufacturers do not resort to increase prices of goods, the increased demand which we anticipate could lead to expansion in production whose multiplier effect could primarily be creation of jobs.
In other words, those arguing that the SRD Grants and the R1 500 Basic Income Grant being demanded by SAFTU pose risks for the economic growth and even job creation, are thumb-sucking from the riddle playbook of neoliberalism, which is filled with economic mythologies.
In the period when greater forms of investment are required, the Gross Fixed Capital Formations (GFCF) remained low. In the first quarter of 2021 the GFCF declined by 2.6%, remained flat in the second and third quarter, and increased by 1.9% in the fourth quarter. In the first quarter of 2022, GFCF increased by 3.9%.
This measly growth in GFCF attest to the ongoing investment strike that big corporations have been on for the past 6 years, whilst government is being told to divest, fiscally consolidate and cut expenditure on social goods and services.
Inadequate measure of GDP
In our long standing criticism, SAFTU has pointed that the Stats SA does not count in its measurement of economic growth/decline, “depreciating equipment (wear and tear on machines), women’s unpaid work, and especially the depletion of our natural wealth that is stripped out as minerals and only counted as “income.”
Indeed, what has now become public knowledge about the destruction of Passenger Railway Agency of South Africa (PRASA) equipment and infrastructure, constitute what is referred to as “depreciating equipment”. If recorded, this would give a contradicting picture: that what we call a slight growth is actually a serious decline if we factor in the depreciating equipment and depletion of our mineral resources.
It may sound absurd when we lament that the depletion of mineral resources should not only be counted as income. However, the fact that main proceeds of those mineral resources are packaged by multinational corporations who are even engaged in illicit financial flows makes case that the depletion of mineral resources represents a negative growth.
Growth and capitalism
The contradiction of the capitalist mode of production continue to appear starkly in the fact that a simple growth does not automatically translate into job creation. For instance, the financial sector grew by 1.7% and yet recorded 72 000 job shed in the same quarter according to the Quarterly Labour Force Survey (QLFS).
The massive unemployment, even in the period of slow growth, is a vindication that the social crises of capitalism will never be eradicated, because it is the central heartbeat of capitalism.
SAFTU calls on workers and the working class as a whole to organise for the abolishment of capitalism, and to organise a new mode of production.
Statement issued on behalf of SAFTU by the General Secretary, Zwelinzima Vavi:
For more details, contact National Spokesperson at:
066 168 2157