South Africa Union Rejects New Pay Offer as Strike Continues

Members of South Africa’s biggest union turned down a new pay offer from metals employers and are continuing a strike involving more than 220,000 workers in the manufacturing and engineering industries.

“Workers have rejected” the latest pay offer from the Steel and Engineering Industries Federation of Southern Africa, Andrew Chirwa, president of the National Union of Metalworkers of South Africa, said by mobile phone. Numsa, as the union is known, is seeking a one-year deal while Seifsa is offering to raise wages for lowest paid workers by 10 percent in the first year of a three-year agreement.

The strike is set to enter its third week after the failure of the latest talks, which were mediated by the government. The stoppage is costing the industry about 300 million rand a day ($28 million), according to Seifsa, as the employers’ lobby is known. The strike is affecting as many as 12,000 companies including Nampak Ltd. (NPK), Africa’s biggest can manufacturer, carmakers including General Motors Co. (GM) and Evraz Highveld Steel. (EHS)

Seifsa hasn’t had an official response from Numsa since making its new offer to the union on July 8, the employers’ group said in an e-mailed statement today.

The union has revised its wage demand to a 12 percent increase from 15 percent, according to Chirwa. South Africa’s inflation rate was 6.6 percent in May.

Manufacturing Strain

The strike “has the ability to really bring the economy to its knees if it is prolonged,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities, said by phone from Johannesburg. “From an economic impact point of view it is serious if this strike is prolonged.”

Manufacturing, which makes up about 15 percent of the economy, is already under strain after a five-month mining strike curbed factory output. Production fell 3.7 percent in May from a year ago, the biggest decline in nine months, the statistics office said yesterday. Finance Minister Nhlanhla Nene said last week the economy probably won’t grow as fast as the 2.7 percent estimated by the government in February.

“The longer the strike goes on, the bigger the impact will be, not necessarily across the economy but to some particular parts of the economy, particularly manufacturing,” Trade and Industry Minister Rob Davies told reporters in Cape Town today.

The rand weakened 0.2 percent to 10.7225 per dollar as of 2:53 p.m. in Johannesburg, taking its decline this year to 2.2 percent.

A production halt at General Motors’s plant in the eastern coastal city of Port Elizabeth is in its seventh day as the strike affected supply of auto-components, according to company spokeswoman Denise van Huyssteen. Most of the carmakers have built up sufficient inventory to continue operating for two to three weeks, Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, said by phone.

(A previous version of this story was corrected to fix the name of the union.)

To contact the reporters on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net; Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net

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

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