Two of South Africa's top economists yesterday challenged Cosatu over its role in the angry debate around inflation targeting.
The union has opposed the Reserve Bank's 3 percent to 6 percent inflation target range and has also criticised the concept of inflation targeting.
Iraj Abedian, the chief economist of Pan-African Investment Research, said inflation harmed the poor and he was surprised that Cosatu was not prepared to face that reality.
And Econometrix chief economist Azar Jammine said Cosatu was "remiss" for not focusing on the real issues around inflation, including poor labour productivity.
"But that could threaten its power base," he said.
Mboweni was criticised for attempting to keep inflation within the target range, because high interest rates caused hardship to householders.
But Abedian said growth and job creation would be eroded, and the poor would suffer, if the target ceiling was raised from 6 percent to 10 percent.
The reason was that real purchasing power is destroyed by rising prices. Abedian said the underlying causes of inflation were often overlooked.
"Politicians, trade unionists and some economists don't want to be confused by the facts," he said bluntly.
He identified the essential problem as "production costs which are influenced by labour productivity, the cost structures of public utilities and the scope for collusion and price- fixing in the economy".
But he said these issues were lost in the debate over inflation targeting.
full story from Business Report here
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