South Africa faces strike wave as labor strife widens
JOHANNESBURG (Reuters) - South Africa faced a strike wave across leading sectors of the economy on Thursday and the labor unrest threatened to hit its struggling gold industry, already squeezed by rising costs and falling bullion prices.
Despite pleas from President Jacob Zuma and other government leaders for peaceful wage negotiations in Africa's largest economy, the National Union of Mineworkers (NUM) said its members in the construction sector would down tools from Monday.
The NUM was also consulting its membership on a strike in the gold industry, which could start next week following an impasse in salary talks with mining companies.
Although South Africa has fallen in the world ranking of gold producers, gold remains its main mineral export and the industrial action, including an auto industry strike already under way, will inflict more damage on the economy.
Violent wildcat walkouts in the mining industry last year cost billions of dollars in lost output, dented economic growth, and led to damaging downgrades of South Africa's credit rating. More than 50 people died in protests at the mines.
The strife has also battered the rand, which dropped to a new four-year low against the dollar early on Thursday.
"We trust that working together, all parties will cooperate and see value in promoting lasting labor peace in our crucial mining sector," Zuma said on Thursday.
He was addressing a gathering of the 85,000-strong SACTWU textile workers' union, whose members also voted to walk out possibly from as early as next week if no agreement is reached with employers to settle a dispute over salary structures.
Increasing wage claims and militancy among workers scrambling to make ends meet as their living costs rise pose a big problem for Zuma's African National Congress (ANC) government before elections scheduled for next year.
It faces accusations that since apartheid ended in 1994, Nelson Mandela's liberation movement has paid more attention to the interests of a wealthy elite than to the country's workers, unemployed and poor.
Trade Minister Rob Davies cited "a deteriorating labor relations environment, rooted in deep inequalities, rooted in insecurities arising from changes in the fortunes of the mining industry, insufficient career pathing, high levels of worker indebtedness".
"All of this, we think, has created a situation where there are very high wage demands and a loss of patience with more moderate negotiating frameworks," he said in Cape Town.
Kevin Lings, chief economist at Stanlib, told Reuters that more strikes would scare off potential investors and raise the cost of international borrowing for South Africa, if they led to further credit downgrades.
"Overall, it has already done South Africa quite significant damage and obviously ongoing strike action will continue to undermine the ability of South Africa to prosper," he said.
GOLD INDUSTRY "IN CRISIS"
A strike would heap pressure on the declining gold industry, where about half of South Africa's shafts are losing money as producers are squeezed between growing worker militancy that has pushed up wage costs and falling bullion prices.
Labor accounts for over 50 percent of costs and gold's spot price is 30 percent lower than the record peak of over $1,920 an ounce it attained almost two years ago.
"I do think that there needs to be some kind of recognition by organized labor of the situation the mines find themselves in. The gold industry is frankly in crisis," said Nick Holland, chief executive of Gold Fields (GFIJ.J).
The NUM represents about 64 percent of the roughly 140,000 miners in the South African gold industry, where major operators include AngloGold Ashanti (ANGJ.J), Gold Fields (GFIJ.J), Harmony (HARJ.J) and Sibanye Gold (SGLJ.J).
The opposing sides in the gold sector remain far apart after the weeks of talks. The employers' latest offer was a 6 percent wage increase for some categories.
The NUM, which wants a 60 percent hike, walked out of the talks with a smaller union, UASA, and applied for a so-called "certificate of non-resolution" from the government mediator, which was granted. This effectively allows them to strike.
"The earliest we will issue companies with notice of the strike is Monday next week," NUM spokesman Lesiba Seshoka said.
With such notice normally coming 48 hours before any action, this meant a gold industry stoppage could start on Wednesday.
The NUM's more hardline rival, the Association of Mineworkers and Construction Union (AMCU) which represents about 17 percent of the gold labor force, has submitted wage demands as high as 150 percent but is still engaged in negotiations.
A membership turf war between NUM and AMCU was behind last year's mine violence.
The construction stoppage that has already been announced would affect major companies such as Wilson Bayly Holmes Ovcon (WBOJ.J), Aveng Ltd (AEGJ.J) and Group Five Ltd (GRFJ.J).
South Africa's faltering economy is already losing an estimated $60 million a day to a strike by 30,000 workers in the car manufacturing sector that accounts for 6 percent of gross domestic product.
This strike entered its fourth day on Thursday and has affected global firms operating in South Africa, including Toyota (7203.T), Ford (F.N) and General Motors (GM.N).