Deputy Reserve Bank Governor warns of high risk of runaway inflation

Reading Time: < 1 minute

Deputy Governor of the South African Reserve Bank (SARB) and member of the Monetary Policy Committee (MPC), Fundi Tshazibana, says there is a high risk of runaway inflation between the level of wage demands and the productivity rate. Tshazibana was addressing the Nedgroup Investment Treasurers Conference in Johannesburg on Thursday.

The risk emanates from high levels of compensation that are below the productivity rate.

“And this is because the structure of our labour market is such that some parts of the workforce are privileged. They [are] either protected by labour law that favour insiders or skills shortages that confirm market power. These segments tend to demand full cost of living adjustments over and above any productivity growth that they achieve. This tends to drive up inflation for everyone else,” adds Tshazibana.

The video below is reporting more on the story: