S. Africa Metals Union to Resume Pay Talks to End Strike

The South African union leading a walkout by 220,000 metalworkers will resume wage talks with employers on July 9 as the strike heads for a second week.

The National Union of Metalworkers of South Africa last week rejected an improved offer from the Steel and Engineering Industries Federation of Southern Africa to increase the salaries of lowest-paid workers by 10 percent this year. Numsa is demanding a 12 percent raise and a ban on labor brokers.

The strike that began on July 1 has been marred by violence, caused General Motors Co. (GM) to halt production because of a disruption of auto-component supplies, and threatens about a third of South African manufacturing output. Moody’s Investors Service said last week the nation’s credit rating may be at risk because of the walkout, which follows a five-month mining strike that caused the economy to contract in the first quarter of the year.

“The strike can only end once the employers put a proper offer on the table,” Mphumzi Maqungo, Numsa’s national treasurer, said by phone. “We need a full response for all of our demands including pay raise, allocations.”

The stoppage affects as many as 12,000 employers, including companies such as Bell Equipment Ltd. (BEL), Evraz Highveld Steel & Vanadium Ltd. and units of Murray & Roberts Holdings Ltd. (MUR) and Aveng Ltd. (AEG) Bayerische Motoren Werke AG. said on July 4 it brought forward planned maintenance at its plant in Pretoria due to the strike, halting production for a week.

‘Negative Impact’

The rand weakened for a second day, dropping 0.2 percent to 10.78 per dollar by 6:12 p.m. in Johannesburg. The yield on South African government’s rand bonds maturing in December 2026 rose two basis points to 8.41 percent.

The strike “will have a fairly immediate negative impact, widening the trade and current-account deficits and slowing economic growth,” Annabel Bishop, an economist at Investec Ltd. in Johannesburg, said in a note to clients today. “Manufacturers tend not to hold significant stockpiles, delivering what they produce on order instead.”

Seifsa, as the employers’ association is known, met with Labor Minister Mildred Oliphant today and is supportive of state intervention in the labor dispute, spokeswoman Ollie Madlala said by phone today.

The National Employers Association of South Africa, a separate group representing about 3,000 businesses, said wage talks with Numsa failed on July 4. Neasa, as the employers group is known, said it’s holding negotiations with two other labor unions.

Eskom Construction

“Neasa currently has no mandate to go beyond an 8 percent” increase, Chief Executive Officer Gerhard Papenfus said in an e-mailed response to questions today. “It is Neasa’s view that any future deal must prevent” job losses in the industry.

A Numsa strike crippled the South African car-making industry last year, causing about 20 billion rand ($1.85 billion) in lost revenue during a 15-day stoppage, according to an industry group.

The walkout has also affected construction at Eskom Holdings SOC Ltd.’s Medupi and Kusile power-plant sites. Worker attendance was about 30 percent lower, Andrew Etzinger, a spokesman for the utility, said by text message. Eskom isn’t planning any new talks with Numsa, which last month rejected a 5.6 percent pay-increase offer from the electricity utility and is demanding 12 percent.

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net; Simon Thiel at sthiel1@bloomberg.net Nasreen Seria, Karl Maier

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