Reuters - Video

Edition: US | UK | IN | CN | JP

Finance Videos

South Africa strikes spark investment rethink

Monday, October 07, 2013 - 02:24

Oct 7 - A four-week strike by workers in South Africa's auto components sector, which crippled production, came to an end on Sunday. The past years has seen a wave of worker unrest. Joanna Partridge asks what's happened to Africa's biggest economy.

▲ Hide Transcript

View Transcript

Strikes have become a common sight in South Africa. It's got some of the world's worst labour relations. The past year has seen a wave of sometimes violent worker unrest, especially in the mining industry. The latest walkout - by tens of thousands of employees in the auto components sector - ended after four weeks on Sunday, when trade unions agreed a wage deal. It followed another strike by 30,000 car workers which cost the industry $2 billion in lost output. Richard Hunter is from Hargreaves Lansdown. SOUNDBITE: Richard Hunter, Head of Equities, Hargreaves Lansdown, saying (English): "It's very possible of course that South Africa doesn't live up to the potential that investors thought it had a couple of years. Certainly things such as social and indeed worker unrest do of course provide something of a brake on GDP and of course the rest of the world isn't waiting while South Africa basically gets its act together." The auto industry has been one of the country's few bright spots - accounting for 6% of its GDP. But now some car makers like BMW are reconsidering how much to invest in South Africa - where wage increases haven't led to higher productivity. Labour unrest is a concern for the central bank, and has been behind some previous downgrades to South Africa's credit rating. Finance Minister Pravin Gordhan told Reuters employers and unions have to change their culture. SOUNDBITE: Prabhan Gordhan, South African Finance Minister, saying (English): "Start embracing a culture of constructive engagement which would ensure that you don't have long and extended strikes taking place so that we can reduce the amount of, if you like, perception volatility in our environment which is quite crucial for generating confidence." It's crucial, seeing that South Africa's reliant on inflows of foreign capital. Unemployment has been stuck at around 25% for years says the IMF's Laura Papi. SOUNDBITE: LAURA PAPI, ASSISTANT DIRECTOR OF AFRICAN DEPARTMENT AND MISSION CHIEF TO SOUTH AFRICA, IMF SAYING (English): "South Africa needs to fix the future starting today. And to do this, bringing everybody together, so that the government would bring to the table businesses and labour to find a common solution and create more jobs, this is really the key." One thing is clear. Without structural reforms to boost growth and create those jobs, South Africa may struggle to regain its competitive edge.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

South Africa strikes spark investment rethink

Monday, October 07, 2013 - 02:24