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.
TEXT SIZE - +
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

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 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.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.