South Africa Metal Employers Revoke Offer as Strike Persists

A South African engineering employers’ group withdrew an improved wage offer to striking metalworkers after it was rejected by the biggest union representing them, raising concern the impasse will further hurt the economy.

The Steel and Engineering Industries Federation of Southern Africa rescinded its proposal to raise pay by 10 percent in the first year, 9.5 percent in the second and 9 percent in the third, Ollie Madlala, spokeswoman for Seifsa, said in an e-mailed response to questions today. The National Union of Metalworkers of South Africa, the nation’s largest labor group, publicly rejected the offer on July 13.

“We are not going back to council for a new offer,” Madlala said. “It means now the strike continues until further notice.”

The strike involving more than 220,000 workers in the manufacturing and engineering industries started on July 1 and is affecting about 12,000 employers including Nampak Ltd. (NPK), the continent’s biggest can manufacturer, and carmakers such as General Motors Co. and Bayerische Motoren Werke AG. The walkout, the biggest organized by Numsa, follows a five-month stoppage in the platinum industry that caused the economy to contract in the first quarter.

Growth Prospects

“We are deeply concerned about the impact of the Numsa strike on growth prospects,” Nazmeera Moola, an economist and strategist at Investec Asset Management in Cape Town, said in an e-mailed note to clients today. “It is damaging the attractiveness of South Africa as a manufacturing destination.”

The walkout has affected construction at the sites of Eskom Holdings SOC Ltd.’s Medupi and Kusile power plants, which will be the continent’s biggest coal-fired stations when complete. Medupi is due to start delivering power to South Africa’s constrained electricity grid in the first quarter of next year.

“The work shutdown at Medupi is severely worrying due to the effect this will have on electricity supply,” Moola said.

South Africa’s labor laws remain sound and appropriate, although the difference in pay between senior directors and entry-level workers needs resolving, Labor Minister Mildred Oliphant told lawmakers in Cape Town today.

“The continued inequalities in the work place, poverty among the employed, and the ever-increasing wage gap are not helping whatsoever,” she said. “The need to tackle the wage gap between top executives and ordinary workers has become urgent as failure to do so carries the biggest risk to the workings of our labor market institutional framework.”

Reduced Demand

Numsa will convene at an undisclosed venue to consider a plan of action on intensifying the strike today, it said in an e-mailed statement yesterday. It reduced its wage-increase demand to 10 percent from 12 percent and said it’s willing to end its strike if employers agree to a one-year deal.

Seifsa has reverted to its previous offer of a 10 percent raise in 2014, and 9 percent in 2015 and 2016 respectively. The National Employers Association of South Africa, which represents smaller companies, is offering workers a maximum raise of 8 percent.

A quarter of the nation’s workforce is unemployed, according to Statistics South Africa.

To contact the reporter on this story: Tshepiso Mokhema in Johannesburg at tmokhema1@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net John Bowker, Nasreen Seria, Ben Holland

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.