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South Africa’s Ruling ANC Says New Unions Display ‘Anarchy’

May 23 (Bloomberg) -- South Africa’s ruling African National Congress said mining companies shouldn’t yield to “scare tactics” by labor unions as platinum and chrome mines were shut after work stoppages that have damped economic growth.

Strikes have shaved 30 basis points from growth in Africa’s largest economy this year, ANC Treasurer-General Zweli Mkhize said in a speech at a National Union of Mineworkers conference in Pretoria today, a copy of which was e-mailed.

“The mining companies must not be allowed to give in to scare tactics and make settlements on basis of intimidation and settle on unprincipled and unreasonable demands for fear of vigilante tactics,” Mkhize said. “It pains us, comrades, to see this labor relations and negotiation framework being undermined and destroyed through anarchy, violence, intimidation murders and illegal wildcat strikes.”

Wage talks in the mining industry that start in June have increased the risk of strikes, threatening the economic outlook after stoppages last year cut output by about 15 billion rand ($1.6 billion), according to the National Treasury. South Africa has the world’s largest known reserves of chrome and platinum.

The assassination of a labor official on May 11 near the 13-shaft Marikana operation of Lonmin Plc and a dispute over union recognition there sparked fears of renewed unrest when employees refused to work for two days in the mine in the North West province. The official was a member of the Association of Mineworkers and Construction Union, which has displaced the NUM as the biggest representative of workers in the platinum industry.

Militancy, Anarchy

The NUM is an affiliate of the Congress of South African Trade Unions, which forms part of the country’s ruling alliance led by the ANC.

“There is a difference between militancy and anarchy that we see growing in newly formed mining unions supported by the ultra-leftist groupings that are active in the North West province,” Mkhize said. “Inevitably the anarchy will result in many jobs being lost and the economy declining.”

Lonmin, the third-biggest producer of platinum, today failed to reach an agreement with the AMCU on forming a new recognition pact, which would give the union more rights, it said in a statement. The AMCU wants Lonmin to close the office of the NUM, which previously spoke for the majority of employees and now has the support of 30 percent.

Members Decide

Arbitration, which is part of the dispute-resolution process in South Africa’s labor law, should take four to six weeks to complete and any ruling will be binding on the union and the company.

The AMCU’s members at Lonmin have yet to decide on whether to participate in arbitration, union President Joseph Mathunjwa said by phone from Pretoria.

In the gold and coal industries, the NUM this week asked for wage increases ranging from 10 percent to as much as 61 percent for entry-level miners. Inflation was 5.9 percent in April. Talks will start through the Chamber of Mines in June.

“The outlook for the sector remains bleak,” Reserve Bank Governor Gill Marcus said today. The monetary policy committee, which today kept the benchmark rate at a more than 30-year low of 5 percent, is concerned about the prospect of wage settlements well above inflation, productivity growth and the risk of strikes, which may curb growth and exports, she said.

Wage Spiral

The risk of a wage-price spiral remains high and would negate the benefits of pay increases to workers, and undermine the competitive gains of the rand’s depreciation, Marcus said.

The currency traded less than 0.1 percent stronger at 9.5673 per dollar by 5:37 p.m. in Johannesburg, halting the longest losing streak in 25 years. The rand is trading at the weakest levels in four years against the dollar.

Workers’ pay demands shouldn’t “wreck the economy” and wildcat strikes don’t advance the interests of the country’s poor, President Jacob Zuma said in a speech to traditional leaders in Cape Town, according to a copy that was e-mailed.

“The task of leadership today requires that we all draw the line between anarchy and constructive engagement,” he said.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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