South African Builders Lost $275 Million in Revenue on Strike

South African construction companies lost about 2.7 billion rand ($275 million) in revenue after workers downed tools for three weeks seeking higher wage increases, according to the builders’ federation.

“The strike took place under a no-work, no-pay agreement,” Norman Milne, president of the South African Federation of Civil Engineering Contractors, said in an e-mailed response to queries today. “Contractors would still have to pay for construction plants and equipment that stood idle on site, plus their staff and workforce who were not on strike.”

About 90,000 builders, led by the National Union of Mineworkers, ended a three-week strike on Sept. 13, after accepting a wage increase of as much as 12 percent as part of a two-year agreement. The deal will add 3 percent, or 150 million rand, to the industry’s wage bill this year, according to Milne.

“It will not impact current project costs,” Milne said. “Our members have no option, but to price these increases into future bids and pass these costs on.”

Inflation in Africa’s biggest economy accelerated to 6.4 percent in August, breaching the central bank’s upper limit. The economy is forecast to expand 2 percent this year, the slowest pace since a recession in 2009.

The 7-member FTSE/JSE Africa Construction & Building Materials Index fell for the first time in three days, declining as much as 1.6 percent. Murray & Roberts Holdings Ltd. (MUR) and Aveng Ltd. (AEG) are the country’s biggest construction companies by market value.

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

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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