WHY ARE SOUTH AFRICAN UNIONS FLEXING THEIR MUSCLES?

WHY ALL THE STRIKES?

South Africa’s powerful trade unions are closely allied to newly elected President Jacob Zuma, and helped propel him to power in an April election on a pro-poor platform. Mr. Zuma has vowed not to change pro-business policies credited with bolstering Africa’s biggest economy under predecessor Thabo Mbeki but investors are watching for rising union influence. Industrial action is the union’s main weapon and, emboldened by Mr. Zuma’s ascent, they are wielding it with a vengeance. Construction workers paralyzed work on 2010 World Cup soccer stadiums with a week-long strike that grabbed international headlines earlier this month before agreeing on a wage increase. Miners have threatened action as have workers in the chemical and petroleum industry, shop staff and employees at the debt-laden national broadcaster.

WHAT DO THE UNIONS WANT?

Unions hope the wave of strikes will raise pressure on Mr. Zuma to do more to help South Africa’s millions of poor by prioritizing job creation and poverty alleviation, potentially at the expense of investor confidence. In reality, Mr. Zuma has little room for manoeuvre. Hamstrung by South Africa’s first recession in 17 years and with markets watching closely for signs he is yielding to pressure from labour, Mr. Zuma is unlikely to make radical policy shifts.

HOW WILL THE STRIKES AFFECT THE ECONOMY?

The wave of industrial action could hardly come at a worse time for Mr. Zuma, the private sector and the broader economy. Africa’s biggest economy slid into recession in the first quarter, with manufacturing and mining particularly hard hit by the slump in global demand caused by the financial crisis. Companies battling depressed consumer spending and lower commodity prices are under pressure from shareholders to contain wage bills. Some employers have settled on wage increases. Construction firms agreed to 12 per cent – above inflation of 8 per cent – but say they can make up the lost time from this month’s strike and will still deliver 2010 World Cup soccer stadiums and infrastructure on time. A series of generous settlements could add to inflationary pressure, prompting the central bank to hold off on further interest rate cuts that some commentators say are needed to further spur the lacklustre economy.

Reuters

SECTORS AFFECTED AND WAGE SETTLEMENTS

GOLD

South African gold producers raised their pay offer for miners yesterday, averting a possible strike for now. The National Union of Mineworkers (NUM) – South Africa’s biggest union – said gold employers raised their offer to between 9 and 10.5 per cent from the last proposal of an increase of between 8 and 10 per cent. The union is demanding a 15 per cent wage hike, nearly double South Africa’s last measured inflation of 8 per cent. The talks will resume on July 28. South Africa’s gold output in 2008 fell to 220,127 kg, its lowest level in 86 years, due to a power shortage and dwindling grades, lowering it to the world’s No. 3 producer behind China and the U.S.

PLATINUM

The NUM rejected last week an improved 8.5 per cent wage offer by Impala Platinum, the world’s second largest producer of the precious metal. It lowered its own demand to 15.5 per cent from an initial increase of 20 per cent. Wage talks with bigger rival Anglo Platinum are also continuing without any strike threat. Production of platinum in South Africa, the world’s top source of platinum, fell 11 per cent to 4.53 million ounces last year.

PETROLEUM, PAPER, CHEMICALS

South African paper and chemical sector workers began a strike on Monday after wage talks failed. The bigger Chemical, Energy Paper, Printing, Wood and Allied Workers Union (CEPPWAWU) had been in talks with employers for a 10 per cent pay rise, but employers only offered an 8 per cent increase, which is in line with inflation.

RAIL

Workers in the commuter rail industry may declare a strike this week. Metrorail has revised its 5 per cent offer to 7 per cent. Satawu is demanding a 12.5 per cent increase.

DOCTORS

A crippling doctors’ wage strike lasted about two weeks with doctors demanding more than 50 per cent in pay rises, pressuring the government to boost spending. Most doctors are back at work even though some of their demands are yet to be met.

PUBLIC BROADCASTER

Workers at South Africa’s public broadcaster SABC rejected the latest wage offer made to them by the broadcaster on Monday. SABC offered rises of between 9.25 and 10.25 per cent, short of a 12.2 per cent hike requested by the workers.

WAGE SETTLEMENTS

CONSTRUCTION: Workers ended a week-long strike that disrupted work on stadiums for the 2010 World Cup on July 15, after they agreed to a 12 per cent wage increase.

DE BEERS: South African workers at De Beers, the world’s top diamond producer, have agreed to a pay rise of 9 per cent.

PETROLEUM: Solidarity union said on Monday it had reached a deal with petroleum sector bosses for a 9.5 per cent pay rise, averting a possible strike that could have affected fuel supplies..

Reuters