Home News New mass strike threatens to rock South African economy

New mass strike threatens to rock South African economy

Published on 01/07/2014

More than 200,000 members of South Africa's largest union downed tools on Tuesday, beginning an indefinite strike that threatens to bring the engineering sector to a halt and rock an already unstable economy.

Members of the National Union of Metalworkers marched in cities across the country, demanding a “double-digit” pay increase and a host of new employment rules.

In Johannesburg city centre, thousands of red-clad workers waved sticks and tree branches as they marched to the offices of an industry federation to hand in their demands.

The strike is expected to hit more than 10,000 metals and engineering firms that account for about four percent of South African economic output, according to economists at Citigroup.

Among the companies affected are multinationals BAE Systems and Bell Equipment.

But industrial unrest could also spread to the power generation sector, where wage talks at state-owned electricity monopoly Eskom are deadlocked.

In the coastal city of Port Elizabeth, where workers also gathered, car makers warned that parts suppliers were already being hit, potentially threatening their own production.

– Another wave –

The strike comes as another blow to South Africa’s beleaguered economy, which contracted in the first quarter amid a five-month-long platinum strike that was resolved only last week.

Last-gasp talks on Monday night between the metal workers’ union and industry leaders brokered by Labour Minister Mildred Oliphant failed to break the deadlock.

Union leaders have framed the dispute as part of a broader class struggle to redress the wrongs of apartheid and colonialism.

On Tuesday they voiced their determination to see workers — particularly black workers — get a bigger share of South Africa’s economic pie.

“We are not backing down,” Zwelinzima Vavi, the secretary of the union federation COSATU, told workers.

“We are asking for a share in the economy of this country,” he said, urging workers not to give up on their demands for a “living wage”.

“If they think we will tire after one week they are mistaken.”

In its list of demands, the union insisted it would strike until the lowest paid non-skilled workers in the engineering sector earned around 6,000 rand ($560) a month, a roughly 12 percent increase.

That is roughly double the rate of inflation, which is currently at 6.6 percent.

Apart from wage increases, the union also wants be able to negotiate wage increases every 12 months, rather than agree a three-year deal.

They demand a housing allowance of not less than 1,000 rand ($95) per month for each employee and training of workers to expand their skills.

The militant union, which recently broke ties with the ruling African National Congress (ANC), and has threatened to become a political party, also demanded firms do not take advantage of a tax break to hire young workers because it encourages cheap labour.

Some fear another mass strike could push Africa’s most industrialised nation toward a recession that would increase widespread social unrest and already crippling unemployment.

The country’s credit rating was recently downgraded by Standard and Poor’s to one notch above junk status, a rating that would put South African government bonds off limits to many big institutional investors.

The Steel and Engineering Industries Federation of Southern Africa has warned that the strike would cost industry 300 million rand ($28 million) a day.

The federation’s CEO Kaizer Nyatsumba said firms were “deeply concerned about the damage caused by the strike to the economy.”

“For the sake of our economy, which has been seriously under-performing and has already taken a considerable hammering… we hope that it will be possible for us, employers and labour, to find one another over the next few days,” he said.

Further talks are tentatively scheduled for Friday.

But in Johannesburg, welder Sam Nyashe said he was not fazed by the prospect of losing wages during a lengthy strike.

“No matter how long it takes, it’s worth it. This is war,” he said.