South African Unions Must Commit to Incresing Productivity, Patel Says

South African Economic Development Minister Ebrahim Patel said labor unions, which have organized a series of strikes this year, must commit to increasing productivity as they demand higher wages.

“What we must avoid is another debilitating policy debate over the next number of years on the abstracts of the labor market and see that we can instead bring together business and labor on some clear and concrete productivity outcomes,” Patel, the former head of South Africa’s largest textile trade union, told businesspeople on the sidelines of a conference of the ruling African National Congress in Durban today.

Exports were crippled, automobile plants halted, schools closed and hospitals disrupted this year as workers went on strike demanding wage increases of more than double the 3.7 percent inflation rate. Labor unions are in alliance with the ANC and their support was instrumental in President Jacob Zuma’s rise to power last year.

The economy will probably expand 3.2 percent this year and 3.6 percent in 2011, the International Monetary Fund said in a report yesterday.

A shortage of skills and collusion over prices between businesses are among the biggest structural issues restraining growth, Patel said. He was speaking in the eastern port city on the third day of the ANC’s National General Council.

The government should stick to its plan to curb expenditure to help reduce the budget deficit, which may fall to 4.7 percent of gross domestic product in the year through March 2012, from 5.9 percent this year, according to the IMF.

Rising public-sector wage demands may “jeopardize” the government’s fiscal targets, the Washington-based lender said.

To contact the reporters on this story: Mike Cohen in Durban via Johannesburg at mcohen21@bloomberg.net; Franz Wild in Durban via Johannesburg at fwild@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

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