South Africa transport strike to end after new deal

Commuters line up for an alternate transport as rail workers strike in Durban, May 17, 2010.

JOHANNESBURG (Reuters) - South African logistics group Transnet reached a deal with striking workers on Thursday to end a long-running dispute, but a labor federation threatened fresh industrial action during the soccer World Cup.

The transport strike, in its third week, disrupted railways and ports in Africa's largest economy and affected coal exports in one of the world's main suppliers of the power station feedstock to Europe and Asia. It may threaten the country's coal export target of 65 million tonnes this year.

The stoppage also dented exports of metals, cars, fruit and wine to Europe, as well as imports of vehicle parts and fuel, costing the economy at least 7 billion rand ($890 million) in lost production and sales.

The South African Transport and Allied Workers Union (Satawu) said a majority of its members had voted for Transnet's new offer, which included a one-off 1 percent payment on top of an 11 percent wage increase.

"The offer has been accepted ... and the understanding is that the workers will start going back to work tomorrow," Robert Mashego, Deputy President at Satawu, told Reuters.

The ruling African National Congress (ANC) had demanded a quick solution to the standoff, warning the dispute could hurt the soccer World Cup, which runs for a month from June 11.

Satawu, which represents some 21,000 workers out of Transnet's 54,000 staff, had called for sympathy stoppages at other transport firms, including at the national airline and the coal export terminal.

While the Transnet action looks to have been resolved, Labour federation COSATU, which has nearly 2 million members and is a powerful ally of the ANC, demanded a greater say in economic policy and hinted at withdrawing from a formal alliance with the ruling party.

The labor federation also threatened a strike during the World Cup over sharp power price increases by utility Eskom if a mediation meeting planned for June 14 fails.

COSATU also said it may call a national strike from October 7 if labor brokers, who provide contract workers to companies, are not banned.

STOPPAGES

Recent strikes have drawn criticism from economists and the central bank, which say unions are trying to hold the government and state enterprises to ransom by staging strikes close to the World Cup, to squeeze pay hikes above inflation of 5.1 percent.

"We are seeing continued upside pressures on wages in both the public and private sectors," said Peter Attard Montalto, emerging market economist at Nomura International.

"Wage settlements are still unanchored from inflation and will cause a range of second-round inflation effects through the second half of the year ... leading ultimately to rate hikes."

Late on Tuesday, the National Union of Mineworkers called off a strike at Eskom due to start on Wednesday after the state-owned firm obtained a last-minute court order declaring the planned industrial action illegal.

BILLION LOSSES

With a backlog that will take at least a month to clear, the strike has taken its toll on the country's mining, transport and manufacturing industries and hurt producers of perishable goods.

Transnet said that with 65 percent of its workers back on the job after the company's bigger union accepted a previous wage offer, the logistics group had managed to move a backlog of crucial shipments, including World Cup cargo and jet fuel.

Shipping companies are asking clients to pay a surcharge to partly recover their losses. Fruit producers began using costly air freight to export their produce and car manufactures have opted to fly in some parts to be able to keep production going.

All automotive plants were limping along due to the backlog at ports, an industry body said.

Fuel imports through South Africa to landlocked Botswana have fallen by half, but supplies within South Africa itself have been unaffected.

Analysts said the strike is likely to have long-lasting consequences on the country's exports, with South Africa losing some contracts to other markets such as India or Brazil. Job cuts may also be looming, they said.

Global miners with operations in South Africa, including Anglo American Plc, Xstrata and the world's top steelmaker ArcelorMittal have declared force majeure on the supply of iron ore, ferrochrome and steel.

(Additional reporting by Peroshni Govender; Editing by James Macharia and Matthew Jones)