Bloomberg News

South African Union Offers Two-Year Deal to End Metal Strike

July 17, 2014

The National Union of Metalworkers of South Africa said it would relax its demands and agree on a two-year pay deal with employers as the government oversees renewed talks to end a 17-day manufacturing strike.

The labor group has previously asked for a 10 percent wage increase as part of a one-year deal, while the Steel and Engineering Industries Federation of Southern Africa has offered a three-year package including a 10 percent raise in the first year, 9.5 percent in the second and 9 percent in the third. Numsa will now accept a 10 percent increase in each of the two years, according to General Secretary Irvin Jim. South Africa’s inflation accelerated to 6.6 percent in May, the highest in almost five years.

“We are not far from each other,” Jim said in an interview with Bloomberg TV Africa today in Johannesburg. “It’s only 0.5 percent” difference in the second year. “We are very flexible.” Talks could continue about what to agree for the third year, he said.

Labor Minister Mildred Oliphant is mediating talks with Seifsa, as the employers’ lobby is known, and the union after an initial effort to resolve the strike failed last week. The walkout, which started on July 1, is costing the metals industry about 300 million rand ($28.1 million) a day, according to Seifsa. About 12,000 companies are affected, including carmakers Toyota Motor Corp (7203), Ford Motor Corp. (F:US) and General Motors Co.

Best Interest

“If Numsa is willing to settle at a two-year wage agreement of 10 percent per year, and drops the demand for a housing allowance, then there is a reasonable possibility that employers will accept the deal,” Annabel Bishop, chief economist at Investec Bank Ltd., said by phone from Johannesburg. “Employers will likely accept it as it’s in the best interest of the South African economy to get industrial production up and running again.”

Seifsa spokeswoman Ollie Madlala said further talks with Numsa were needed before the employers’ group could comment.

The strike led by Numsa, the country’s biggest union, is threatening an economy still reeling from a five-month stoppage by platinum mineworkers that ended in June. Africa’s second-biggest economy contracted 0.6 percent in the first quarter compared with a 3.8 percent expansion in the final three months of last year.

The South African Reserve Bank said the economy would probably expand by 1.7 percent, down from a 2.1 percent growth forecast earlier this year, assuming a rapid resolution to the metals strike.

“Wider Ramifications"

‘‘The strike in the platinum sector contributed to the downward revision of the growth forecast, and the latest forecast has not factored in the possibility of a protracted work stoppage by the metal workers, which would potentially have much wider ramifications because of the direct linkages to other sectors of the economy,’’ Reserve Bank Governor Gill Marcus told reporters in Pretoria today.

Toyota has shut two production lines as the strike curbs supply of components to carmakers. Bayerische Motoren Werke AG has cut shifts to two from three, according to spokesman Guy Kilfoil.

Finance Minister Nhlanhla Nene said he was concerned about industrial relations in South Africa and called for a speedy resolution to the work stoppage. The strike is taking place at a time when the economy is performing below its potential, he told reporters at the Development Bank of South Africa today.

‘‘The strike is bleeding the economy,’’ Numsa’s Jim said in the Bloomberg TV interview, to be broadcast tomorrow. ‘‘We don’t want to cripple the economy.”

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net John Bowker, Robert Valpuesta


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