July 8, 2009 / 12:48 PM / 10 years ago

Construction strike in South Africa could affect World Cup

JOHANNESBURG (Reuters) - South African construction workers began an indefinite strike on Wednesday, halting work at stadiums for the 2010 World Cup in the biggest industrial action since new President Jacob Zuma took office in May.

The National Union of Mineworkers (NUM) said the action by about 70,000 workers would continue until employers gave in to their demand for a 13 percent pay rise. The companies have so far refused to go beyond 10 percent.

Escalating strike action is a major challenge for Zuma, who has to balance the demands of the union and leftist allies who helped bring him to office with keeping market-friendly policies at a time Africa’s biggest economy is in its first recession in 17 years.

The union, South Africa’s biggest, said most of its members in the building sector had joined the protest at sites for the stadiums and other big infrastructure projects.

“The numbers that I’m getting seem to tell us that there has been a total shutdown today,” said union spokesman Lesiba Seshoka.

Earlier he said: “Our intention is to take it forever, so as long as the employers are not bringing what we want to the table.”

Although the strike will affect construction work at mines, it should not have a direct impact on production in the world’s biggest producer of platinum, also a major gold producer.

Eurasia Group analyst Mike Davies said there was some way to go before the strike became a major concern, but it was being closely followed by local and foreign investors ahead of the World Cup.

“They will be looking for signs that Zuma will be unafraid to make difficult decisions when the time comes,” he said.

FULL UNION BACKING

South Africa’s powerful COSATU trade union federation fully backed the strike, saying it was as passionate about the World Cup as anyone but would not tolerate stadiums being built by workers who were underpaid or in unhealthy conditions.

Officials have said the 10 World Cup stadiums, half of them new, will be delivered by December, although there have been reports of possible delays at the venue in Cape Town.

Shares in South African construction firms initially fell because of uncertainty over the strike, but recovered later. Firms likely to suffer include Murray & Roberts Holdings Ltd, WBHO and Group Five.

Work also stopped on the mass transit Gautrain high-speed rail project. Scores of striking workers danced and sang at the site of a new station in Johannesburg’s Sandton financial district.

South Africa’s state-owned utility Eskom’s 4,800 megawatt Medupi power station could also be affected, slowing efforts to fill a chronic power shortage in the country.

Expansion work on the Richards Bay Coal Terminal export facility could be delayed further, NUM said this week.

Unions across sectors have demanded double-digit pay hikes as inflation declines at a slower pace that previously expected, after peaking above 13 percent in August last year.

But the government has little room for maneuver. Zuma has so far neither bent to the union demands nor openly challenged them.

Writing by Marius Bosch; Editing by Matthew Tostevin

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