South Africa Union Says Parties Closer to Pact to End Strike

The South African union leading a strike by more than 220,000 metalworkers said it’s making headway with employers in narrowing the gap in demands.

“If employers dig a bit deeper, there should be prospects for settlement very soon,” Andrew Chirwa, president of the National Union of Metalworkers of South Africa, or Numsa, said by phone today from Johannesburg. “We don’t think that the parties are too far apart regarding the negotiations.”

The strike that started on July 1 is costing the steel and metal industry about 300 million rand ($28 million) a day, according to the Steel and Engineering Industries Federation of Southern Africa, the employers’ lobby known as Seifsa. Stoppages are affecting as many as 12,000 companies and production has been hurt at carmakers including General Motors Co. (GM) and Bayerische Motoren Werke AG.

Seifsa, which represents some large employers, has offered salary increases of 8 percent to 10 percent, while the National Employers Association of South Africa, also known as Neasa, offered a maximum raise of 8 percent.

Numsa, South Africa’s biggest trade union, plans to present an improved wage offer from Seifsa to its members and make a decision on the proposal today, Chirwa said.

“Workers are also losing,” he said. “The economy is also suffering.”

Unaffordable Deal

The union rejected an offer last week in which the lowest-paid workers would obtain a 10 percent wage increase. The labor group is asking for an increase of 12 percent. South African inflation accelerated to 6.6 percent in May.

As Seifsa and Numsa inch closer to a deal, Neasa, which represents smaller employers, said it doesn’t support Seifsa’s offer of as much as 10 percent. The group is negotiating with the Solidarity and UASA unions on a three-year wage deal.

“They might be reasonably close to a deal,” Neasa Chief Executive Officer Gerhard Papenfus said by phone. “But what works for a big employer in Johannesburg does not work for a small business in a rural area. Small businesses cannot afford to meet this offer.”

Police arrested 53 Numsa members on July 8 following attacks on trucks and offices east of Johannesburg.

“We have enough instruments in our labor-relations machinery to resolve labor disputes,” President Jacob Zuma said in a speech today. “There is no need to resort to violence. The metal industries’ sector needs to go back to full production as soon as possible.”

Economic Contraction

The countrywide strike follows a five-month work stoppage in the platinum industry that caused the economy to contract in the first quarter. Africa’s second-biggest economy will probably expand at a slower pace in the full year than a 2.7 percent target, according to Finance Minister Nhlanhla Nene.

The rand snapped two days of gains, weakening 0.4 percent to 10.7065 per dollar by 6:04 pm. in Johannesburg. The yield on the government rand bond due December 2026 rose 2 basis points, or 0.02 percentage point, to 8.32 percent.

Manufacturing output fell 3.7 percent in May from a year ago as the mining strike hurt production in industries such as iron and steel, the Pretoria-based statistics office said in a report today.

There is “a real danger” that the metals and engineering strike could “break the camel’s back,” Seifsa Chief Economist Henk Langenhoven said in an e-mailed statement.

To contact the reporters on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net; Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net; John Viljoen at jviljoen@bloomberg.net Kim McLaughlin, John Bowker

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