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S.Africa union agrees deal to end crippling strike: leader

Hopes rose that a crippling strike plaguing South Africa may be close to an end, after mining union AMCU said on Friday it had agreed in principle to a deal to end the nearly five-month walkout.

The stoppages have sunk the South African economy into its first contraction since the global crisis five years ago, and on Friday led two key credit ratings agencies to issue gloomy assessments of the country’s outlook.

Standard & Poors lowered South Africa’s sovereign credit rating to “BBB-“, just a notch from junk bond status, citing feeble growth and the prolonged strike.

Fitch ratings agency also revised the outlook on South Africa to negative from stable while affirming its credit rating at ‘BBB’, near the bottom of the investment-grade scale, partly because of the mining stoppages.

The South African treasury said however in response to the S&P downgrade that “government’s ability and commitment to service its debt has not changed”, pointing out that the “foreign component of South Africa’s debt … is under 10 per cent of the total debt stock.”

Earlier, union leader Joseph Mathunjwa said that “in principle” the Association of Mineworkers and Construction Union had agreed to the latest offer by employers, the SAPA news agency reported.

“There are still issues that we need to consult with the employer,” the agency quoted him as saying.

A local union leader said earlier the conditions include the rehiring of a group of workers who were fired in April after striking illegally.

Mathunjwa’s comments came a day after South Africa’s three main platinum producers — Anglo American Platinum, Impala Platinum and Lonmin — said that they had struck a deal in principle that union leaders would take to members for final approval.

The walkout began in January, when more than 70,000 workers downed tools to demand higher wages.

The new wage offer for lowest-paid workers includes a 1,000-rand ($90, 70 euro) raise in monthly salary for two years, then 950 rand a month for the following three years, according to a statement from Impala Platinum.

The deal would be backdated to July last year for Implats and Amplats, while Lonmin would implement the raises from last October.

This would practically double the current minimum wage of 5,500 rand to 10,500 rand ($980, 720 euro) by July 1, 2017, and effectively preempt further strikes for the next five years.

Other worker categories would get an 8.0-percent raise for 2013 and 2014, then 7.5 percent the next three years.

“Our proposal is basically for a 1,000 rands a month for five years,” Implats spokesman Johan Theron told AFP.

“But the feedback we are receiving from the mass meetings is that they are saying perhaps they only want the first three years and maybe not all the five years.”

This would suggest the workers might consider a fresh strike and new negotiations within three years.

The offer would fall short of the 12,500 rand ($1,160, 860 euro) the workers demanded, a figure used as rallying cry over the past two years that propelled AMCU to prominence.

The employers were still awaiting AMCU’s official response, said Theron.

– ‘Needy families’ –

While the two parties wrangle over details of the deal, thousands of workers in the Rusternburg mining belt, who have not been paid since the strike started, are battling poverty.

On Friday, hundreds queued outside a local church in Marikana to receive food parcels distributed by a charity organisation.

Wendy Mofokeng from Food Bank described the situation in Marikana and other mining communities around Rustenburg as dire.

“We’re giving food to needy families in Marikana,” she said.

Miner Thabo Febe said he was happy about the news of the deal and hoped that the strike would be over soon.

“The deal is very nice…we have been suffering for five months,” said Febe.

“I’m happy because thing are going to change now.”

South Africa holds around 80 percent of the world’s known platinum reserves, and platinum group metals raked in 9.0 percent of export earnings last year.

Africa’s most developed economy shrank in the first quarter this year by 0.6 percent, a stunning reversal amid a rapid boom elsewhere in the continent, official data released late May showed.