News / Economy

    S. Africa Platinum Strike Ends, But Not Its Impact

    Mineworkers dance as they gather for check-ins near Lonmin's Marikana platinum mine before returning to work, June 25, 2014.
    Mineworkers dance as they gather for check-ins near Lonmin's Marikana platinum mine before returning to work, June 25, 2014.

    After a five-month strike, South African platinum mine workers began returning to work Wednesday after a deal was signed to end the country's longest and costliest labor action.  South African businesses and government are struggling to find ways to cope with the impact and to avoid such prolonged stand-offs in the future.

     In Marikana, there is an atmosphere of celebration and relief at the end of the strike.  
     
    On January 23 70,000 mineworkers downed their tools, demanding higher wages and benefits.  After months of stalemate, the Association of Mineworkers and Construction Union (AMCU) signed a deal June 24 with the world’s top platinum producers, Lonmin, Anglo-American Platinum and Impala Platinum, to end the crippling action.
     
    Boyfie Mgiba has been working in the mines for 20 years and says for the past five months he lived hand to mouth, depending on family and charities.  
     
    “That five months was tough, tough, tough, tough," he said. "Now I am very happy,” said Mgiba.

    Ratings agency, Standard & Poor’s, cited the costly strike as one of the main reasons South Africa’s credit rating was downgraded in May.
     
    Casualties from the strike, include shop owners who say they have missed rent payments and employees’ wages, forcing some shops to close.

    Taxi driver Mokhotlong believes it could take many months for some businesses to recover.
     
    “Everyone is happy, everybody yeah," he said.  "Because it was not right, total.  For everybody it was very bad."
     
    Many in Marikana can be seen wearing AMCU T-shirts in support of the union that negotiated the final deal for the mineworkers.  
     
    The three-year deal gives mineworkers an annual pay rise of around $94 per month for the next three years.  This is about a 20 percent increase, but far less than the 100 percent the AMCU originally demanded.
     
    AMCU was founded in 2001 and has steadily accumulated support, and political clout.  

    “A victory for the working class,” is how union president Joseph Mathunjwa described the end of South Africa’s most costly and longest strike.
     
    “I would say that this was a breakthrough we have managed to unshackle ourselves from this structure that came long from colonization to the national party, to the last 20 years of our democracy that have not been challenged, so it is a breakthrough,” he said.
     
    Proudly wearing a faded green AMCU shirt, Lonmin miner Kgomotso Mothoagae says he is delighted with the deal and the struggle was well worth the reward.
     
    “Joseph Mathunjwa did a very good job for the workers. It is getting more members... It is growing now AMCU, it is growing tremendously," he said. "Mathunjwa is doing a very good job.”
     
    But the strike cost mining companies an estimated $2.3 billion in earnings and producers are widely expected to restructure, which will inevitably lead to job cuts and could potentially pave the way for further walk-outs.
     
    The strike has had a huge impact in the country and has led to growing calls for legal "strike breaking" mechanisms to allow the courts or the state to intervene during protracted and costly strikes.

    The labor court here has already blocked AMCU’s call for strikes in the gold sector.  

    Economists say something needs to change.
     
    “The way things should proceed is to the constitutional courts," said labor economist with Adcorp, Loane Sharp. "The constitutional courts need to produce guidelines on how to balance these rights.  

    Sharp says unions in South Africa may be losing their potency, despite their latest strike victory.  
     
    “In the year 2013, based on official data, union membership countrywide dropped from 3.3 million to three million, a drop of nearly 10 percent," he said. "During 2013, unions lost... [$9.3 million] in lost membership dues, due to declining membership.”
     
    More trouble is on the horizon for South Africa’s government and businesses.  The National Union of Metalworkers of South Africa (NUMSA), the country's biggest union with more than 200,000 members, is threatening to down tools from July 1, a move that would hinder the country's crucial auto industry. 

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