News / Economy

S. Africa: Economy Cannot Absorb More Labor Unrest

FILE - South African Finance Minister Pravin Gordhan delivers his 2013 Budget speech at Parliament in Cape Town, Feb. 27, 2013.
FILE - South African Finance Minister Pravin Gordhan delivers his 2013 Budget speech at Parliament in Cape Town, Feb. 27, 2013.
Reuters
South Africa's ailing economy cannot afford more mine labor unrest, Finance Minister Pravin Gordhan said on Monday, as the platinum industry's main trade union served notice on the world's top three producers that it planned to strike this week.

A series of sometimes violent strikes in the factory and mining sectors constrained growth to a sluggish 2 percent in 2013, hampering efforts by President Jacob Zuma's government to create badly needed jobs as it braces for elections this year.

The African National Congress has swept elections since overturning white minority rule in 1994, but the party Zuma now heads faces growing criticism that it has failed to lift millions of blacks out of poverty during 20 years in power.

Platinum producers Anglo American Platinum, Lonmin and Impala Platinum said they had received notice from the Association of Mineworkers and Construction Union (AMCU) to strike in 48 hours, setting the  stage for another crippling wave of unrest.

The chamber of mines, which represents bullion producers, said it was seeking a court order to block plans by the AMCU to down tools at Sibanye Gold's Driefontein mine, Harmony Gold's Kusaselethu and Masimong mines, and at AngloGold Ashanti's local operations.

The AMCU, which has a record of militancy, has rejected a 8 percent pay hike that rival union National Union of Mineworkers (NUM), which still represents most gold miners, agreed with producers last year.

The rand hovered close to recent five year lows after news of the planned strikes and Gordhan's warning, with scope to extend its nearly 4 percent losses against the dollar in the first three weeks of the new year.

Renewed labor strife in Africa's biggest economy will raise a red flag for ratings agencies after more than 50 people died during violent mine protests in 2012 that triggered downgrades from Moody's, Fitch, and Standard and Poor's and helped knock about 25 percent off the rand's value.

“The platinum industry needs to seriously get around the table,” Gordhan told state broadcaster SAFM in an interview on Monday. “We can least afford another round of strikes that will act as a destabilization to the platinum sector, which has had increasing difficulties over the last 18 months.”

Strikes constrain South Africa rating

Earlier this month, Moody's cited weakening productivity and strike-related business losses, exacerbated by declining terms of trade, as a major credit challenge for South Africa.

“The economy has never fully recovered its momentum following the global recession in 2009, partly due to domestic political and economic turbulence ignited by violent labor unrest and the associated uncertainty that it has created,” it said.

Demands for wage increases well above inflation of 5.3 percent will also worry the Reserve Bank, which has been blocked from further policy loosening by price pressures stemming from the rand's weakness.

The central bank will likely keep interest rates at a four-decade low of 5 percent at its first policy meeting of the year next week.

At Anglo American Platinum and Lonmin, the AMCU is seeking a minimum monthly wage of 12,500 rand ($1,200) for entry-level workers - more than double current levels, under the populist banner of a “living wage”.

At Impala, the union scaled back its demand late last year to just over 8,500 rand a month.

The NUM said on Friday it had accepted overall wage increase offers of between 9.8 and 11.8 percent from mid-tier platinum producer Northam Platinum in a bid to end a 75-day strike by more than 7,000 miners.

Companies have said they can ill afford steep increases as power and other costs soar while prices for platinum, used in pollution-reducing automobile catalytic converters, remain depressed.

You May Like

Video On The Scene: In Ethiopia, 'Are You a Journalist?' Is a Loaded Question

VOA's Anita Powell describes the difficulties faced by reporters in fully conveying the story in a country where people are reticent to share their true opinions More

Nigerians Await New President With High Hopes

When pomp and circumstance of inauguration end in Abuja, Buhari will sit down to the hard task of governing Nigeria More

India's Restrictions on Several NGOs Raise Concerns

Political analysts link recent clampdown on advocacy groups to report last year that said foreign-funded NGO’s negatively impact economic development More

This forum has been closed.
Comment Sorting
Comments
     
by: Magician
January 21, 2014 1:57 PM
Sadly the Unions have made unrealistic high monetary demands which shall have far reaching effects on the economy and investment, resulting in a possible interest rate hike and further layoffs. However it will not end even if an agreement is reached as wage increases are an annual "given", spiralling to where, nobody knows??

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Expelled from Pakistan, Afghan Refugees Return to Increased Hardshipi
X
Ayesha Tanzeem
May 28, 2015 6:48 PM
Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Expelled from Pakistan, Afghan Refugees Return to Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video Floodwaters Recede in Houston, but Rain Continues

Many parts of Texas are recovering from one of the worst natural disasters to hit the southwestern state. Heavy rains on Monday and early Tuesday caused rivers to swell in eastern and central Texas, washing away homes and killing at least 13 people. As VOA’s Greg Flakus reports from Houston, floodwaters are receding slowly in the country's fourth-largest city, and there likely is to be more rain in the coming days.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.

VOA Blogs

World Currencies

EUR
USD
0.9152
JPY
USD
122.70
GBP
USD
0.6494
CAD
USD
1.2374
INR
USD
63.925

Rates may not be current.