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Johannesburg - South Africa's business confidence fell to its lowest in 15 years in July, amid concerns that rising wage demands by unions will lead to higher unemployment, a survey by the South African Chamber of Commerce and Industry (Sacci) showed on Thursday.
The Sacci business confidence index dropped to 87.9 in July from 89.7 in June, the lowest level since September 1999, Sacci said in a statement.
“Despite low business confidence, Sacci welcomes the balance being tilted towards a more positive outlook for the world economy for the rest of 2014. An improved European Recovery and affirmation of South Africa’s Agoa status could positively influence trade to and from South Africa," the industry body said in a statement.
"Sacci is concerned about the employment outlook and the impact that declining employment will have on income inequality and possible increases in the Gini coefficient. This will further negatively affect the real disposable income of households and their expenditure potential which is already under pressure.
“Rising unemployment is one of the immediate consequences of high wage demands supported through strike activity. The secondary economic consequences - including potential adverse impacts on income distribution - will surface more starkly in the medium term. With the consumer playing a diminishing role in the domestic economy, related measures of business confidence will likely be drawn lower."
Employers in the platinum mining, metals and engineering sectors have signed double digit wage increase deals this year to end protracted strikes that are likely to dent growth in Africa's most advanced economy.
International developments were responsible for the positive contributions made by share and precious metal prices in the context of a staid domestic economic atmosphere, it said.
The Sacci business confidence index dropped to 87.9 in July from 89.7 in June, the lowest level since September 1999, Sacci said in a statement.
“Despite low business confidence, Sacci welcomes the balance being tilted towards a more positive outlook for the world economy for the rest of 2014. An improved European Recovery and affirmation of South Africa’s Agoa status could positively influence trade to and from South Africa," the industry body said in a statement.
"Sacci is concerned about the employment outlook and the impact that declining employment will have on income inequality and possible increases in the Gini coefficient. This will further negatively affect the real disposable income of households and their expenditure potential which is already under pressure.
“Rising unemployment is one of the immediate consequences of high wage demands supported through strike activity. The secondary economic consequences - including potential adverse impacts on income distribution - will surface more starkly in the medium term. With the consumer playing a diminishing role in the domestic economy, related measures of business confidence will likely be drawn lower."
Employers in the platinum mining, metals and engineering sectors have signed double digit wage increase deals this year to end protracted strikes that are likely to dent growth in Africa's most advanced economy.
International developments were responsible for the positive contributions made by share and precious metal prices in the context of a staid domestic economic atmosphere, it said.
