Business Week International International Business
LABOR IS BACKING MANDELA INTO A CORNER
Anyone who thought that black majority rule would usher in an era of labor peace in South Africa is having a rude awakening. The country has been racked by strikes throughout July and into early August. Some of the confrontations have been reminiscent of labor conflict in the apartheid era. Police, for instance, have used dogs and rubber bullets against picketers illegally obstructing entry to Pick 'n Pay stores, the country's largest retailer. Auto workers, hotel and construction employees, and even court interpreters have joined the strikes.
The stoppages pose a crucial challenge for President Nelson Mandela and his African-National-Congress-led government. The labor movement represented by the 1.4 million-member Congress of South African Trade Unions (COSATU) was the ANC's biggest supporter in the campaign that culminated in the triumphant April elections. In return, some unionists expected the government at the very least to side with them verbally in industrial disputes.
But doing that would damage Mandela's efforts to portray South Africa as a business-friendly environment that can attract badly needed foreign investment. As a result, he has maintained strict neutrality. Feeling pressure to calm the unrest, Mandela's Labor Minister, Tito Mboweni, did take the unusual step of appointing a mediator in the Pick 'n Pay dispute, and a settlement was reached on Aug. 3.
PRICE PRESSURES. If the strikes snowball, they could be damaging for all of South African business. The auto industry, for instance, already faces serious competitive problems as the government chops tariff barriers to comply with its international economic commitments to reduce protectionist trade barriers. The 20,000 striking auto workers are demanding 12% wage increases, as against management's 9% offer. The mines have been hit by wildcat strikes, which could mushroom into bigger actions.
COSATU General Secretary Sam Shilowa dismisses talk of any crisis. "These are simply the wage strikes that normally happen every year around this time," he says. While most strikes in South Africa do occur around August, the traditional bargaining period for many industries, work stoppages are way up this year. Strikes are running at twice the 1992 and 1993 levels. There hasn't been this level of labor unrest since 1987.
One reason for the upsurge in strikes is the heightened expectations among South African blacks. Workers think that majority rule should quickly result in higher living standards. Johannesburg management consultant Gavin Brown estimates that in the first six months of the year, companies paid a 1% to 2% premium on wage settlements because of this. The managing director of a factory that has been struck for three weeks says he has never seen his workers so militant.
Workers are also beginning to worry about being squeezed by inflation. Although the inflation rate dipped to a 7.1% annual rate in April, the lowest in 20 years, the recovery is already pushing up prices. Economists and consumers are also skeptical about the government's pledges that the ambitious reconstruction and development program will be financed in noninflationary ways. Most forecasters see inflation edging up toward double figures during the first half of 1995.
MOVING ON. The rise in confrontation is also partly attributable to a decline in the quality of union leadership. Unions have for 10 years been an effective political and administration training ground for members of the liberation movement. But suddenly, many have moved to high-level jobs outside the union. Some two dozen top union officials have left the movement to become members of Parliament, while numerous others have been elected to regional legislatures. This has left the unions, which have developed generally nonconfrontational bargaining strategies over the years, less skilled than they were a year ago. These personnel shifts, combined with rising expectations and inflation fears, have produced the rash of strikes.
Pessimists fear that the rise in labor militancy poses a threat to Mandela's economic program. That's probably going too far at this point. As another management consultant, Rene Crawitsky, puts it: "For now, it is normal strike activity, but if it goes beyond September, we have a crisis." That could mean one of Mandela's first major challenges, however painful, will be to damp down the expectations of the very people who elected him.Alan Fine in Johannesburg