June 5 (Bloomberg) -- The National Union of Metalworkers of South Africa is preparing to strike from July 1 after talks over demands for a wage increase in the metal and engineering industries failed, General Secretary Irvin Jim said.
Numsa, South Africa’s biggest union that represents more than 200,000 workers in those industries, is asking for a 15 percent monthly salary increase in negotiations with employer groups. The state-owned power utility, Eskom Holdings SOC Ltd, is offering a 4.3 percent raise in separate talks, the union said in a statement. Numsa said its lowest-paid workers earn 3,050 rand ($287) a month at Eskom projects.
“We are representing our members’ interests and have told them to ready themselves for a protracted strike if the demands are not met,” Jim told reporters today in Johannesburg. “We want to take our time and that is why we are giving employers a month to consider the demands.”
Labor action this year dragged South Africa’s economy to its first contraction since a recession in 2009. Gross domestic product fell an annualized 0.6 percent in the first quarter amid a strike since Jan. 23 by more than 70,000 members of the Association of Mineworkers and Construction Union at the platinum operations of Anglo American Platinum Ltd., Lonmin Plc and Impala Platinum Holdings Ltd.
“Another strike would seriously devastate this economy,” Isaac Matshego, an economist at Nedbank Group Ltd. in Johannesburg, said by phone. “The manufacturing sector is a key exporter and the moment we have a strike it will put further pressure on exports which will contract, that will definitely widen the trade deficit.”
Manufacturing, which accounts for 15 percent of the nation’s economy, contracted 4.4 percent in the first quarter, according to Statistics South Africa.
The rand strengthened 0.4 percent against the dollar to 10.7308 by 4:55 p.m. in Johannesburg, paring the decline this year to 2.2 percent.
ArcelorMittal South Africa Ltd., Africa’s biggest steel producer, is being dealt with separately, Numsa President Andrew Chirwa said. “We are on the verge of signing an agreement,” he said.
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