Johannesburg – The Public Servants Association (PSA) has warned the recent repo rate hike of 25 basis points could render workers homeless – simply because they can no longer afford their mortgage installments.
Last Thursday, the South African Reserve Bank (SARB) announced the increased repo rate, which is now at 7.25%.
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The PSA said it was “shocked by the heartless decision” to raise the repo rate for the eighth consecutive time, which it warned, “may leave many public servants homeless as they can no longer afford these payments”.
The union added: “SARB Committee [Monetary Policy Committee] members seem to be oblivious to the reality faced by South Africans.
“Workers, and particularly public servants, are facing extreme financial pressures.”
The PSA said the combined effects of constant interest rate increases, rising living costs, and stagnant salaries pose a threat to government employees of losing their houses, which are becoming unaffordable.
“Downgrading is also no longer an option for many employees who are drowning in debt with impaired credit,” the PSA said.
“This situation is resulting in employees calling for early and partial access to pension fund savings to save their housing.”
Employees are not only paying increasing bonds and increased medical-aid contributions but must absorb high school fee costs owing to dysfunctional public schools and overcrowding, and endure expensive food, fuel, and electricity costs, leaving them very little financial room.
Announcing the repo rate hike – which translates to interest hikes for borrowers – SARB Governor Lesetja Kganyago said the move was necessary to reduce the risk of rising inflation.
“The revised repurchase rate remains supportive of credit demand in the near term while raising rates to levels more consistent with the current view of inflation and risks to it,” said the governor.
“The aim of policy is to anchor inflation expectations more firmly around the mid-point of the target band and to increase confidence of attaining the inflation target sustainably over time.
“Guiding inflation back towards the mid-point of the target band can reduce the economic costs of high inflation and enable lower interest rates in the future.”
However, the PSA took a dim view of the rate hike saying: “Constant interest rate increases do not assist in addressing rampant unemployment, inequality, and poverty, which are fuelled by load-shedding”.
The PSA also called on the National Treasury to urgently fast-track the launching of a housing bank to provide loans to public sector employees as the only solution for “homeless” government employees.
“Many of these workers are compelled to rent back rooms in townships or cramped flats where safety and hygiene are absent,” said the PSA.
The PSA said while the launch of the bank was being considered the government should allow employees to access their savings in the Government Employees Housing Scheme.
“It defies logic to continue saving money for a person who is unable to put food on the table,” the PSA said.
“Struggling public sector employees are facing immediate pressing needs.
“Releasing such monies will assist them as government has failed to afford them real salary increases for the past three years or allowing them partial access to their pension money.”