SAfrica transport strike seen widening, talks fail

Mon May 17, 2010 3:12am EDT

Related Topics

* Transport strike enters second week

* Unions lower pay rise demand to 13 pct; inflation 5.1 pct

JOHANNESBURG, May 17 (Reuters) - Talks between striking South African transport workers and logistics group Transnet [TRAN.UL] have failed to end a dispute, threatening to widen action that has crippled the country's rail and port operations.

The strike, in its second week, has hit exports of metals, fruit and wine to customers in Europe and Asia after nearly two-thirds of Transnet's 54,000-strong workforce joined in.

"The Transnet strike is set to intensify with no resolution in sight. Management effectively walked away from any negotiated settlement (last night) after stating an unwillingness to budge on any item of money substance," the Satawu and Utatu unions said in a statement on Monday.

The two unions also began a strike at South Africa's Passenger Rail Agency (Prasa) on Monday, halting all commuter rail operations and affecting millions of passengers.

The strikes are the latest protests in the country ahead of next month's soccer World Cup, which is being held in Africa for the first time. There are concerns that the strike could affect imports of equipment for the event.

The South African Transport and Allied Workers Union (Satawu) and the United Transport and Allied Trade Union (Utatu) represent some 85 percent of Transnet's staff.

The unions have been in mediated talks with Transnet over the weekend. The unions said they had lowered their wage rise request to 13 percent from 15 percent, closer to Transnet's offer of 11 percent, but still no agreement could be reached.

Analysts and the central bank have criticised unions, saying that pay rises well above the 5.1 percent inflation rate would slow South Africa's economic recovery. The lowest paid worker at Transnet earns $470 a month, a union official said.

"Our members will remain steadfast in the withholding of their labour until a settlement is reached," the unions said.

Anglo American Plc's (AAL.L) iron ore unit in South Africa declared a force majeure on shipments last week, joining other global metal exporters such as Xstrata XTA.L, which said it could not supply ferrochrome to its customers. [ID:nLDE64B2B7]

The unions said 60 percent of Transnet's port, rail and fuel operations were disrupted, with no imported goods being offloaded.

Transnet does not operate passenger services and does not transport much coal to power plants, however a prolonged strike may hit imports, fuel supplies and exports of iron ore and coal.

The impact on coal and iron ore exports has been limited due to built-up stocks at ports, but the firms have said they would start feeling the crunch if the strike goes beyond this week. Miners said they were running out of storage space and would need to cut production if they cannot ship products to ports.

Producers of fruit said they were already running out of storage for produce they could not ship and wine makers said exports had stopped. [ID:nLDE64C15O][ID:nLDE64D13V]

The unions called on other trade union federations to escalate their support for the strike. (Reporting by Agnieszka Flak)

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