August 22, 2017 / 4:13 PM / a year ago

CORRECTED-UPDATE 1-South African unions agree wage deal for engineering workers

(Corrects Aug 22 story to clarify in 3rd paragraph that SAEFA was not involved in the wage agreement, but had knowledge of the details)

JOHANNESBURG, Aug 22 (Reuters) - South African unions said on Tuesday they had agreed a three-year wage deal for engineering workers, ending weeks of difficult negotiations and averting an industry strike.

Unions had threatened a strike last month after talks over their demand for wage hikes of 15 percent across the board in the metal and engineering sectors became deadlocked.

They have now agreed to a deal that is expected to see workers get a 7 percent increase in 2017, 6.75 percent in 2018 and 6.5 percent in 2019, the employers association South African Engineers and Founders Association (SAEFA) told Reuters. SAEFA itself was not involved in the wage agreement but had knowledge of the outcome of the talks. It is a former affiliate of the Steel and Engineering Industries Federation of South Africa (SEIFSA), which represented employers in the talks.

The Solidarity union would only say that wage increases would be between 6.5 and 7 percent. Solidarity and the National Union of Metalworkers of South Africa (NUMSA), the two biggest unions involved in the talks, said they would sign the agreement with SEIFSA on Wednesday.

“It gives a bit of clarity and stability for the next three years for the industry to work on in terms input costs,” Solidarity deputy general secretary Marius Croucamp said.

Inflation is around 5.3 percent in Africa’s most advanced economy and the national treasury has said above-inflation wage hikes could hurt its management of government debt after its sovereign ratings were downgraded to “junk” earlier this year.

South Africa is struggling with economic recession and stubbornly high unemployment levels.

While the proposed wage hikes are much less than unions’ original demand, Gordon Angus, executive director of SAEFA, said they would still hurt the industry.

Small and medium sized business owners had called for any new wage increases to be applied just on minimum wage rates and not on actual rates of pay, he said.

“The net effect of increases being given on actuals over the years has been to increase real wages in the industry to levels which are now unaffordable to many companies, especially small-to-medium sized ones,” Angus told Reuters. (Reporting by Tanisha Heiberg and Wendell Roelf Editing by Susan Fenton)

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