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Fitch Labels Wage Agreement Ruling as a Positive for 2021 Deficit

SOUTH AFRICA
  • S. AFRICA STATE-PAY COURT RULING MAY IMPROVE '21 DEFICIT: FITCH
  • in relation to labour court ruling that saw a ZAR 37bn wage with Govt agreement scrapped
  • However, the R37bn was not priced into the budget, so that should have little effect
  • if the ruling is used as precedent for other SOE wage agreements and measures aimed at curbing public sector expenditure - we may see a positive impact on the 21 deficit
  • Nevertheless, constant union obstruction to business rescue/restructurings remains a major hurdle to achieving fiscal consolidation
  • making implementation seem doubtful unless Govt forcefully takes on the unions and shows decisive leadership on the matter
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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