South Africa’s Largest Labor Union Members Review Wage Offer

South Africa’s biggest labor union will consider over the next two days a wage proposal to end a three-week strike in the metals and engineering industry.

The Steel and Engineering Industries Federation of Southern Africa, a Johannesburg-based group whose members employ the most workers in the sector, accepted a Labor Ministry-backed proposal for a 10 percent pay increase per annum for low-level earners over three years. The strike by more than 220,000 workers since July 1, which has affected companies including Toyota Motor Corp. (7203), General Motors Co. (GM) and beverage-can maker Nampak Ltd. (NPK), is costing the industry 300 million rand ($28.5 million) a day, according to Seifsa.

The National Union of Metalworkers of South Africa has started to present the offer to its members, General Secretary Irvin Jim said by phone today. The “sticking issue” of the proposal is that “for the duration of the three-year deal you can’t raise any substantive issues,” while the companies can cut jobs and hire outside contractors, he said.

Numsa’s executive is discussing the offer and the group will convene a number of “general” meetings in the next two days to seek a mandate from members, the union said in a statement late yesterday.

The country’s inflation rate was unchanged at 6.6 percent in June, exceeding the central bank’s target for a third month, Statistics South Africa said today.

‘Critically Important’

The labor organizations have until the close of business on July 25 to accept the offer, which could lead to a return to work on July 28. The deal requires that future employment issues be negotiated at national rather than company or plant level, a clause detailed in Section 37 of the Metal and Engineering Industries Bargaining Council main agreement, according to Seifsa.

“It is critically important for Seifsa,” Lucio Trentini, director of operations at the employers’ lobby, said by phone. “It is at the end of the day a dealmaker or a dealbreaker.”

The Solidarity union, which isn’t on strike, hopes the deal will be accepted, Marius Croucamp, head of metal and engineering for the union, said in a statement yesterday. “We think that Seifsa’s latest offer is fair and we are convinced that our members will also welcome it.”

The walkout may lead to a slowdown in economic growth if it isn’t resolved, Reserve Bank Governor Gill Marcus said last week. It comes after a five-month strike by more than 70,000 platinum miners that ended in June, which pushed Africa’s second-largest economy into contraction in the first quarter as mining output plunged.

The rand strengthened for a fourth day, the longest streak since May 2. The currency advanced 0.6 percent to 10.5088 per dollar, the highest intraday level since May 30.

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

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

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