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South Africa Metalworkers Reach Pay Accord to End Strike

Strike in South Africa
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. Photographer: Mujahid Safodien/AFP via Getty Images

South African metalworkers returned to work today after labor groups agreed to a three-year wage deal, ending a four-week walkout that threatened growth in the continent’s second-biggest economy.

“Unionized employees who took part in the industrial action were back at work,” Lucas Maloka, a human resources executive at Richards Bay-based manufacturing company Bell Equipment Ltd., said in e-mailed comments. Plans are now under way to restore lost production, he said. The majority of striking employees at Scaw Metals Group, 74 percent owned by South Africa’s Industrial Development Corp., also returned to their jobs, according to the company.

The walkout by more than 220,000 workers started on July 1 and cost the manufacturing and engineering industries about 300 million rand ($28 million) a day, according to the employers. The Steel and Engineering Industries Federation of Southern Africa last week offered lowest earners a 10 percent annual wage increase for three years to end the strike, a deal that’s been accepted by the National Union of Metalworkers of South Africa and smaller unions such as Solidarity.

That compares with an annual inflation rate of 6.6 percent in June, unchanged on the previous month. South Africa’s unemployment rate, the highest of more than 40 emerging markets tracked by Bloomberg, increased to 25.5 percent in the second quarter.

Major Losses

“We urge all our members to report for work,” Irvin Jim, general secretary of Numsa, told reporters in Johannesburg yesterday. “The settlement offer has been overwhelmingly and unanimously accepted by our members.”

The metalworkers strike affected production at about 12,000 companies including construction and engineering group Murray & Roberts Holdings Ltd., beverage-can maker Nampak Ltd. and international carmakers General Motors Co., Toyota Motor Corp. and Ford Motor Co.

The strike, which followed a five-month work stoppage at platinum mines, will curb 2014 economic growth by at least 0.3 percentage point, said Mike Schussler, chief economist at research group

“There is no doubt that the economy suffered major direct losses in this strike,” Schussler said by phone today from Johannesburg. “The indirect impact, like carmakers which could not get components, could be even bigger.”

Neasa Rejects

The companies and unions were at loggerheads over a condition in the Seifsa deal that demanded future work-related issues be negotiated at the national rather than plant level. Numsa was able to negotiate a compromise on the clause that enables its members to strike over employment issues that aren’t included in the wage agreement, Jim said.

The National Employers’ Association of South Africa, which represents about 3,000 small- and medium-sized companies, won’t sign the agreement today as its members can only afford an 8 percent increase, Chief Executive Officer Gerhard Papenfus said by phone. Neasa will go to the Labor Court if the deal is extended to all companies, he said.

Neasa called on its members to lock out unionized employees who were on strike and tried to return to work today, Papenfus said.

Seifsa, the biggest labor group by number of employees, will not comment on Neasa’s stance, according to Ollie Madlala, spokeswoman for the federation. The matter is “between them and the Department of Labor now,” she said by phone.

South African central bank Governor Gill Marcus said on July 17 that awarding pay increases that are above inflation could hurt the economy, which contracted in the first quarter. The bank cut its 2014 economic growth forecast to 1.7 percent from 2.1 percent in May.

The rand weakened 0.2 percent to 10.5892 against the dollar as of 2:07 p.m. in Johannesburg.

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