South African State Workers Strike Over Pay Dispute After Talks Deadlocked

South African state workers, including teachers and nurses, began a nationwide strike today after wage talks became deadlocked.

“We promised we were going to shut down the public service, outside of essential services,” Zwelinzima Vavi, general secretary of the Congress of South African Trade Unions, the largest labor federation, told reporters in Cape Town. “We did. Workers are supporting their legitimate demands.”

On Aug. 5, the government made what it said was its final pay proposal, offering to raise its 1.3 million employees’ wages by 7 percent and monthly housing allowances to 630 rand ($87) from 500 rand, backdated to July 1. Adjustments to salary bands meant most workers would on average receive 9 percent increases, Public Service and Administration Minister Richard Baloyi said.

Fourteen unions rejected the offer, demanding 8.6 percent pay increases and housing allowances of 1,000 rand, backdated to April 1.

“We will be back at work tomorrow,” Chris Klopper, chairman of the Independent Labor Caucus, which groups 10 unions representing about 460,000 workers, said by telephone from the capital Pretoria. The outcome of a negotiating session later today with the government will determine whether labor action will be resumed, he said.

Thousands March

More than 10,000 people marched to Parliament in Cape Town, carrying placards reading: “Say no to poverty wages” and “We demand 8.6 percent.” Between 30,000 and 50,000 people joined a peaceful protest in Pretoria, Klopper said. The Cape Town-based e News Channel put the number at 5,000.

Baloyi’s spokesman Dumisani Nkwamba said in a telephone interview from Pretoria that the government is still assessing the overall effect of the strike.

“The impact varies from province to province and facility to facility,” Health Ministry spokesman Fidel Hadebe said in telephone interviews. “Overall the system seems to be coping. Some staff have stayed away, but it’s not those at the core of health-care services.”

The labor action had minimal effect on border control points and offices that issue identity documents and passports, with only 11 percent of staff joining the strike, the Ministry of Home Affairs said in an e-mailed statement.

Rand Falls

The rand posted its biggest decline in three weeks as the strike began, losing as much as 1.2 percent to 7.2740 per dollar. The South African currency was down 1 percent at 7.2452 at 3:34 p.m. in Johannesburg, from a previous close of 7.1900.

South African laws prevent strikes by certain categories of workers who provide essential services and account for about a third of state employees. The strike has not affected the police force, which provides an essential service, “at all,” spokesman Vish Naidoo said by telephone from Pretoria.

A four-week strike in June 2007 shut most schools and disrupted services at some hospitals, clinics and immigration offices and led the government to deploy troops to quell violent protests.

In May, state transport company Transnet Ltd. gave its workers an 11 percent wage increase to end an 18-day strike that crippled exports. State-owned power utility Eskom Holdings Ltd. agreed last month to a 9 percent raise to avert labor action.

Inflation slowed for a sixth consecutive month to 4.2 percent in June, and the central bank expects it to remain within its 3 percent to 6 percent target until the end of 2012.

Granting workers increases in excess of inflation is “not sustainable” and would force the government to divert money from other priorities, Baloyi told reporters in Cape Town on Aug. 5.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net.

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