New labour threat looms after South Africa's longest strike ends

Tue Jun 24, 2014 10:17am EDT

Related Topics

* Platinum strike, longest in country's history, ended Tuesday

* South African mining sector still faces huge headwinds

* Car manufacturing union plans strike on July 1

* Union says will fight planned government labour reforms

By Joe Brock

JOHANNESBURG, June 24 (Reuters) - The end of South Africa's longest strike will provide respite for its troubled platinum sector, but the stranglehold unions have over a flatlining economy has not loosened and more industrial action is looming.

The Association of Mineworkers and Construction Union (AMCU) signed a wage deal on Tuesday with Lonmin , Anglo American Platinum and Impala Platinum to end a five-month stoppage that dragged Africa's most developed economy into contraction.

Around 70,000 strikers can now return to mines that account for 40 percent of global platinum output. But production could take years to reach pre-strike levels, while some shafts are unlikely to re-open and job losses are inevitable, Lonmin says.

AMCU is also pushing for a strike in the gold sector although a labour court has so far blocked those attempts.

"There is little sense of relief among investors or the public since the propensity for strikes will continue," said labour economist Loane Sharp at Johannesburg consultancy Adcorp. "The long-term prospects for the mining sector are bleak."

The strike has cost platinum producers 24 billion rand ($2.3 billion) in lost revenues and miners 10 billion rand in unpaid salaries, according to the firms.

Standard & Poor's downgraded its credit rating on South Africa last month, partly due to the platinum dispute.

LABOUR REFORMS

The stoppage may also have emboldened other labour organisations.

The National Union of Metalworkers of South Africa (NUMSA), the country's biggest union with more than 200,000 members, is threatening to down tools from July 1, a move that would hobble the vital auto industry.

A halt to car manufacturing would hit exports, hammering an economy that contracted in the first quarter for the first time since a 2009 recession, while a weak rand pushed inflation above the top end of the central bank's 3-6 percent target band.

"The key thing to watch is what happens with NUMSA. That would have a very negative impact on the economy," said Peter Leon, a mining analyst at law firm Webber Wentzel.

AMCU's strike dragged on so long partly because of entrenched mistrust between the ruling African National Congress (ANC), the mining companies and unions.

At their starkest, negotiations were overshadowed by the spectre of Marikana, the mining town where police shot dead 34 striking AMCU miners in August 2012, the worst violence against civilians since the end of apartheid 20 years ago.

Mining Minister Ngoako Ramatlhodi, who played an important mediation role after assuming office last month, says he wants to overhaul union-friendly labour laws to avoid another prolonged and nationally damaging stalemate.

"What we're proposing is restructuring of the labour relations regime," he told Reuters. "It's not something that will happen quickly. That is a big deal and we do need everyone to buy into that."

Mooted proposals include more government involvement, limiting the length of strikes or implementing pre-strike ballots, making it harder for union leaders to go on strike and reducing the intimidation that currently prevails.

'WE HAVE TO FIGHT IT'

Pushing through reforms will not be easy, however.

South Africa's unions enjoy massive political clout as formal partners in a governing alliance with the ANC, a legacy of the labour movement's central role in ending white-minority rule two decades ago.

AMCU president Joseph Mathunjwa dismissed any changes to strike laws as he took swipes at government and business leaders on Monday, suggesting labour disputes were far from over.

"There are those recommendations that are being put forward to regulate the strike if it takes too long. We have to fight it," he said after a mass rally of thousands of miners.

There is also nothing to suggest that resident Jacob Zuma will switch from cautious, backroom consensus-builder to strident union-basher.

"Britain was in the same labour situation in the 1970s until Margaret Thatcher came along and reversed that through legislation," said Leon at Webber Wentzel.

"It's different here because the fact is that the right to strike is protected under the constitution and that's not something you can easily trifle with."

($1 = 10.61 South African Rand) (Additional reporting by Zandi Shabalala; Editing by Ed Cropley and John Stonestreet)

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