South Africa Says Strike May End by Week’s Close After Talks

Photographer: Mujahid Safodien/AFP via Getty Images

Workers hold placards as they demonstrate on the first day of a nationwide strike called by South Africa's National Union of Metalworkers to demand a pay raise and better working conditions, in Johannesburg, on July 1, 2014. Close

Workers hold placards as they demonstrate on the first day of a nationwide strike... Read More

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Photographer: Mujahid Safodien/AFP via Getty Images

Workers hold placards as they demonstrate on the first day of a nationwide strike called by South Africa's National Union of Metalworkers to demand a pay raise and better working conditions, in Johannesburg, on July 1, 2014.

A three-week wage strike by 220,000 workers in South Africa’s metals and engineering industries may be resolved by the close of the week after unions and employers held meetings over the weekend, a government official said.

“We are hopeful that the strike is going to be over by the end of this week,” Thembinkosi Mkalipi, acting deputy director-general for industrial relations at South Africa’s Labor Department, said today by phone. “From our point of view, discussions between unions and employers went well.”

The stoppage, led by the National Union of Metalworkers of South Africa, the country’s biggest labor group, began on July 1 and is affecting about 12,000 companies and carmakers including Toyota Motor Corp. (7203) and General Motors Co. (GM)’s units in South Africa. It’s costing the metals industry about 300 million rand ($28.2 million) a day, according to the Steel and Engineering Industries Federation of Southern Africa.

Unions and employers including Seifsa, as the body representing larger companies is known, held meetings on July 19 to end the strike. Both sides are now discussing a settlement with their members and may announce a decision on it later today or early tomorrow, Mkalipi said.

The strike is threatening an economy still reeling from a five-month stoppage by platinum mineworkers that ended in June.

Africa’s second-biggest economy contracted 0.6 percent in the first quarter compared with a 3.8 percent expansion in the final three months of last year.

Employers’ Rejection

The National Employers’ Association of South Africa, which represents small- and medium-sized companies, said it rejected a settlement proposed by the Labor Department.

“What is particularly disappointing is that the ministerial team proposed a settlement arrangement which may satisfy the trade unions but accelerate job losses in the metal industry,” Neasa Chief Executive Officer Gerhard Papenfus said in an e-mailed statement.

Unless it’s resolved, the strike may slow growth in the third quarter since it “would potentially have much wider ramifications because of the direct linkages to others sectors of the economy,” Reserve Bank Governor Gill Marcus said on July 17.

Numsa General Secretary Irvin Jim said July 17 that the union is willing to accept a two-year wage deal with a 10 percent per annum increase after rejecting a three-year package offered by Seifsa.

The stoppage is affecting work on Eskom Holdings SOC Ltd.’s Medupi and Kusile coal-fired power plants.

Eskom Impact

Murray & Roberts Holdings Ltd. (MUR), the country’s biggest builder by market value, has locked out workers at the Kusile facility, company spokesman Ed Jardim said by phone. Work at the Medupi plant, set to be connected to the national grid by December, is at a “slow pace,” he said.

Attendance by contracted workers at the building sites of the two plants has dropped by 30 percent, according to Eskom, prompting the state-owned power utility to add extra shifts.

General Motors has shut down a production line in the eastern coastal city of Port Elizabeth for the 13th day because of the disruption in supplies of car components, Denise van Huyssteen, communications manager for GM Africa, said.

Nissan Motor Co Ltd. (7201) closed its production plant in Pretoria, the capital, on July 14.

“As much as 20 car-component manufacturers have stopped supply to the industry since the beginning of the strike,” Ken Manners, deputy president of the National Association of Automotive Component and Allied Manufacturers, said in a phone interview. “It will take them about two to three days to ramp up capacity” after the strike ends.

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

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Karl Maier, Michael Gunn

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