'Strikes will beget strikes' in 2014

Business

Johannes Myburgh

Analysts fear that as Amcu prepares to strike at two platinum mines this week, industrial action will spread to other sectors.

Struggling South Africa seems set for another year of labour unrest in another body blow for an economy battling high unemployment and struggling to remain the largest on the continent.

The last two years have been dark times for South African labour relations.

Pay strikes have rolled from sector to important sector—mining, manufacturing, transport—leaving a wake of red ink, protests and blood.

Unfortunately, 2014 looks much like the last.

Next week the hardline Association of Mineworkers and Construction Union will move to strike at two of the world's top three platinum producers.

Their members are demanding a "living wage", which would imply a doubling of salaries.

After a series of increases well above the rate of inflation, the union is ready to move to other sectors.

"We look forward to the wage disputes within the platinum, gold and coal sectors," said Amcu president Joseph Mathunjwa.

Robert Besseling, of IHS Country Risk believes that platinum strikes will lead to rapid "contagion to other sectors, such as gold and coal".

"Strikes beget strikes," said labour analyst Andrew Levy. "If striking delivers results, it is expected to spread. That's the situation we find in the past three years."

After the police shot dead 34 striking miners at Lonmin's platinum mine in Marikana, only the foolhardy would rule out the possibility of further violence.

Rivalry among unions for members has prompted more leaders to adopt a tougher stance in talks with firms.

"It's like kidnapping the daughter of a guy and asking for $1-million but he doesn't have $10 000," said labour expert Peter Major from Cadiz Corporate Solutions.

Fears of company closures amid unemployment around 25% have not deterred the demands for a R12 500 minimum monthly wage.

"That 12 500 is nothing compared to these profits. Why do they invest this profit in London instead of investing back to where the workers are?" asked Mathunjwa.

'Economically illiterate'

Analysts say that does not take into account the weak position of South African mines, which are becoming less and less competitive globally.

"Members are economically illiterate and don't understand no company can increase wages by 150%," said analyst Andrew Levy.

"The unions are to some extent ... simply relaying what members put forward."

"Business can't give you an increase if it's suicidal and they're going close the mine," said Major.

"The sooner they have a strike the better."

"When they do it then they will wake up from the dream they're having and we can deal realistically with what's possible."

And elections expected towards the middle of the year are only likely to add fuel to the fire.

The vote will mark 20 years of democracy, but also 20 years in which inequality has stubbornly remained.

The impact on South Africa and the world could be notable.

"Up to 50% of global platinum production is at risk if a sector-wide strike is called," warned analyst Robert Besseling.

This bodes ill for South Africa's economic growth, which amid strikes slumped 0.7 in 2013, its slowest rate in five years.

A recalculating of Nigerian statistics means this year is likely to see South Africa surpassed as Africa's largest economy. - AFP