Use pension funds for coronavirus relief efforts – unions

South Africa’s biggest labor-union federation and a key political ally of president Cyril Ramaphosa is pushing the government to tap state institutions for a stimulus plan to combat the fallout from the coronavirus outbreak.

The Congress of South African Trade Unions, which represents about 1.8 million workers ranging from miners to teachers, wants state companies such as the Public Investment Corp, which oversees government pensions, to provide relief to hard-hit industries including hospitality, manufacturing and mining.

It’s also seeking private companies to contribute.

We want them to “mobilize a public- and private-funded stimulus plan that can target heavily affected economic sectors,” Matthew Parks, the federation’s parliamentary coordinator, said in a response to questions.

Talks are taking place with business and government representatives at the National Economic Development and Labour Council.

South Africa’s government has limited fiscal space and is facing a long recession as measures to contain the pandemic shut down industries. It’s had to bail out the indebted state power and airline companies and lost its last investment-grade credit rating at Moody’s Investors Service on Friday.

Still, there is significant financial firepower in some of the institutions over which it has influence.

Prior to the outbreak, the PIC managed R2.13 trillion ($121 billion) in assets. State-owned lenders, the Industrial Development Corp. and the Development Bank of Southern Africa, have tens of billions of rands of assets.

Government and business representatives have already agreed to a Cosatu proposal that money from the Unemployment Insurance Fund be used to compensate workers who are temporarily laid off.

Other demands include an increase in the value of welfare grants over the next three months and for commercial banks to defer debt repayments.

The banks regulator, which falls under the central bank, on Saturday proposed relaxing capital requirements for banks in a move that Kuben Naidoo, a deputy central bank governor and head of the prudential authority, said could free up R300 billion for additional lending.

“We have an economic firestorm heading our way and bold and decisive leadership is needed,” Cosatu said in a later statement. “We need a serious recovery package to fix this and kick-start the economy.”

Read: South Africa turns to IMF and World Bank for coronavirus aid

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Use pension funds for coronavirus relief efforts – unions