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South Africa on its knees as strike action set to worsen

| Economic factors

South Africa’s economy cannot afford a strike at Transnet, and the stakes are higher than they have ever been with the country already on its knees, says the Steel and Engineering Industries Federation of South Africa (Seifsa).

A full-blown strike at the national port and freight-rail operator will have serious effects on the economy – halting exports and putting thousands of jobs on the line, added the federation.

“A full-blown strike at Transnet, will add to the damage suffered by the South African economy. This will be as bad as load-shedding in terms of economic impact. For an economy battling to maintain momentum this could well be the final nail in the coffin,” said CEO, Lucio Trentini.

On 7 October, Transnet declared force majeure across all its harbours as employees began to strike, demanding higher wages  – the strike continues on Tuesday (11 October), with threats by unions that it will intensify if a resolution is not met.

Over 40,000 union members have downed tools. Transnet and the unions are now in a deadlock negotiations around the table at the Commission for Conciliation, Mediation and Arbitration (CCMA).

The protesting unions, namely the South African Transport and Allied Workers Union (Satawu) and the United National Transport Union (Untu) originally sought a 15% wage increase; however, this has changed.

The unions are currently, according to Satawu’s deputy general secretary Anele Kiet, demanding the following:

A 13% wage increase in light of the rising cost of living

An increase in employees’ housing allowance as employees are unable to qualify for RDP housing or apply for a bond

An increase in the allowance for and the introduction of a medical aid scheme

Kiet told ENCA that the unions would continue with the process of mediation with the CCMA until a resolution is found; however, he said that Transnet had shown no commitment to resolving the matter.

“For that matter, we will be going out to our members after agreeing on picketing rules and go on strike in numbers,” said Kiet.

According to a press statement released Tuesday (10 October), Transnet has acknowledged that the two unions have signed picketing rules and agreed on the site to facilitate peaceful picketing.

This is the outcome of the first day of conciliation talks under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA) on 10 October 2022, said Transnet.

“Parties remain committed to reaching an amicable solution with regards to the wage negotiations when the process resumes on 11 October 2022,” added the company. This follows the two parties disagreeing on whether the strike was, in fact, legal or not. Satawu said it is legal, while Transnet said that it has not complied with certain picketing rules.

A further statement by Satawu indicated that Transnet has now tabled a new offer of between 4.25% and 5% across the board. The union has rejected this offer on the basis that it is below the rate of inflation (7.6%).

The union noted that it has written to President Cyril Ramaphosa, the Finance Minister and the Minister of Public Enterprises seeking intervention.

Agriculture and mining woes

Kumba Iron Ore said the disruption will impact its 120,000 tons a day of export sales. Output will be hobbled by 50,000 tons a day for the first week of the strike and jump to 90,000 tons after that, according to a company statement.

Thungela Resources, South Africa’s biggest shipper of thermal coal, has said a prolonged strike of two weeks would curtail as much as 300,000 tons of export production, reported Bloomberg.

The dispute also poses a risk to South Africa’s food and beverages industry, said Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa.

“The fourth quarter of the year is as busy as any other quarter in terms of trade,” he said in a note. “Stoppages would negatively affect both imports and export activities. The actual costs of it, however, will depend on the duration of the strike.”

Incalculable damage

Industry figureheads from the mining, agricultural and steel industries have stressed the need for urgency, as the longer the strike continues, the more the damage to the country’s economy.

Business Leadership South Africa (BLSA) chief executive Busi Mavuso said that miners and many other companies are losing billions while the strike goes on, with early estimates putting the costs at R6 billion per day.

Seifsa told ENCA that a strike on this scale could tarnish South Africa’s already shoddy reputation as an exporter, making doing business in the future even more challenging.

Mavuso also alluded to the country’s “brand” with global cargo operators likely already moving on to other ports.

In light of the urgency and magnitude of this strike, the minister of employment and labour Thulas Nxesi has joined the wage talks as an observer.

Nexsi told the SABC that the damage to the economy is incalculable, and he will be monitoring the negotiations and speaking with the minister of public enterprises Pravin Gordhan, to ensure that there is a resolution.

 

 

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