S. Africa Union Seeks Change in Offer to End Metal Strike

South Africa’s biggest labor union said it’s opposed to the latest wage offer from employers to end a strike in the metals and engineering industries because of a clause about future negotiations.

The Steel and Engineering Industries Federation of Southern Africa, a group employing the most workers in the sector, offered a 10 percent increase over three years for low-level earners on July 24. Seifsa, as the organization is known, included a demand that future cost-related employment issues be negotiated at national rather than company or plant level as part of the deal, a clause known as Section 37.

“The settlement will stand or fall on section 37,” Karl Cloete, deputy general secretary of the National Union of Metalworkers of South Africa, said in an interview in Johannesburg today. The condition “is disruptive to current negotiations.”

The strike of about 220,000 workers began on July 1 and is costing the industry about 300 million rand ($28.5 million) a day, according to the employers. Numsa has until the end of tomorrow to accept the Seifsa deal, which is supported by the UASA and Solidarity unions.

“Earlier in this strike, Seifsa also made an offer with a deadline that was subsequently retracted,” Christie Viljoen, senior economist at NKC Independent Economists in Cape Town, said in an e-mailed response to queries today. “While the unions may not like this, it represents employers drawing a line in the sand in terms of the time it takes to resolve strikes.”

Growth Slowdown

The walkout may lead to a slowdown in economic growth, according to Reserve Bank Governor Gill Marcus. Carmakers including Toyota Motor Corp. (7203) and General Motors Co. (GM) have stopped production at their South African units because of unavailability of some components. The strike, which affects about 12,000 companies including beverage-can maker Nampak Ltd. (NPK), follows a five-month stoppage by platinum mineworkers that caused Africa’s second-largest economy to contract in the first quarter.

Numsa will get feedback from members from around the country and won’t comment on a final decision until it has a mandate, General Secretary Irvin Jim told reporters today in Johannesburg.

“From Numsa’s perspective, the deadline is an uncommon factor in the South African scenario where unions often have much leeway in the time it takes to consult with their members,” NKC’s Christie said. “Unions see the strike process as having an iron grip on employers, and a deadline on any proposal reduces that grip and returns some control to the employers. This is contrary to the general labor dispensation.”

There were 336 strikes and protests in Africa’s second-biggest economy in the first half of this year, and 714 last year, according to the Institute for Security Studies.

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 Vernon Wessels, Karl Maier

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