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.
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

Syrian Rebels Poised for Anti-Russia Collaboration

Forty-one insurgent groups issue joint statement vowing retaliation for Russian air offensives More

Political Maneuver Revives Export-Import Bank's Chances

Parliamentary tactic gets bill out of committee, but it faces opposition in the Senate More

Beijing Warns US on S. China Sea Patrols

Warning follows news reports Thursday that US military is planning to sail warships close to artificial islands Beijing has been aggressively building More

This forum has been closed.
Comment Sorting
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.
House Republicans in Chaos as Speaker Favorite Withdrawsi
Jim Malone
October 09, 2015 12:32 AM
The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video Hungary Criticized for Handling of Refugees

Amnesty International has accused Hungary of breaking multiple international and European human rights laws in its handling of the refugee crisis. As Henry Ridgwell reports, thousands of migrants and refugees continue to travel through the Balkans to Hungary every day.

Video Iraqi-Kurdish Teachers Vow to Continue Protest

Sixteen people were injured when police used tear gas and rubber bullets to disperse teachers and other public employees who took to the streets in Iraq’s Kurdish north, demanding their salaries from the Kurdish Regional Government (KRG). VOA’s Dilshad Anwar, in Sulaimaniya, caught up with protesting teachers who say they have not been paid for three months. Parke Brewer narrates his report.

Video Syrian Village Community Faces Double Displacement in Lebanon

Driven by war from their village in southwestern Syria, a group of families found shelter in Lebanon, resettling en masse in a half-built university to form one of the biggest settlements of its kind in Lebanon. Three years later, however, they now face being kicked out and dispersed in a country where finding shelter as a refugee can be especially tough. John Owens has more for VOA from the city of Saida, also known as Sidon.

Video Bat Colony: Unusual Tourist Attraction in Texas

The action hero Batman might be everyone’s favorite but real bats hardly get that kind of adoration. Put more than a million of these creatures of the night together and it only evokes images of horror. Sarah Zaman visited the largest urban bat colony in North America to see just how well bat and human get along with each other.

Video Device Shows Promise of Stopping Motion Sickness

It’s a sickening feeling — the dizziness, nausea and vomiting that comes with motion sickness. But a device now being developed could stop motion sickness by suppressing certain signals in the brain. VOA’s Deborah Block reports.

Video Making a Mint

While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Activists Decry Lagos Slum Demolition

Acting on a court order, authorities in Nigeria demolished a slum last month in the commercial capital, Lagos. But human rights activists say the order was illegal, and the community was razed to make way for a government housing project. Chris Stein has more from Lagos.

Video TPP Agreed, But Faces Stiff Opposition

President Barack Obama promoted the Trans-Pacific Partnership on Tuesday, one day after 12 Pacific Rim nations reached the free trade deal in Atlanta. The controversial pact that would involve about 40 percent of global trade still needs approval by lawmakers in respective countries. Zlatica Hoke reports Obama is facing strong opposition to the deal, including from members of his own party.

Video Ukranian Artist Portrays Putin in an Unusual Way

As Russian President Vladimir Putin was addressing the United Nations in New York last month, he was also being featured in an art exhibition in Washington. It’s not a flattering exhibit. It’s done by a Ukrainian artist in a unique medium. And its creator says it’s not only a work of art - it’s a political statement. VOA’s Tetiana Kharchenko has more.

VOA Blogs

World Currencies


Rates may not be current.