JOHANNESBURG (Reuters) - Two months of crippling labor turmoil are likely to force South Africa to look again at its economic growth forecasts, the central bank’s deputy governor said on Sunday.
Wildcat strikes that started in the platinum mines have left more than 50 people dead and spilled to other industries, undermining investor confidence in Africa’s biggest economy and tarnishing President Jacob Zuma’s government.
More than 70 miners were arrested after clashes with police over the weekend and workers at Anglo American Platinum pledged to press on with their wildcat strike even after the company dismissed thousands of strikers.
“Growth forecasts will most likely need to be revisited,” Reserve Bank Deputy Governor Daniel Mminele said in a speech to a JP Morgan investor seminar in Tokyo that was posted on the central bank’s website.
The Reserve Bank’s latest economic growth forecasts were for an average 2.6 percent this year and 3.4 percent next - still far short of the rate South Africa reckons it needs to cut unemployment accounting for a quarter of the labor force.
It was not immediately clear whether those growth forecasts, given in September, were the ones Mminele was referring to.
In another knock for South Africa, Standard and Poor’s cut its credit rating on Friday, citing the strikes and social tensions. Moody’s downgraded South Africa in September.
Reacting to the downgrades, Mminele said they were disappointing, but some of the criticism was valid.
Financial analysts are not only worried by the turmoil, but also by the possible impact on inflation of wage rises that some of the strikers have won - up to 22 percent in the case of Lonmin Plc miners.
The central bank had yet to see evidence that hefty wage increases were becoming the norm, but would have to keep a close eye on them in case they had a spillover in pushing up prices or expectations of price rises, Mminele said.
Clashes continued over the weekend, nearly two months after police shot dead 34 strikers at Lonmin’s Marikana mine on August16, the bloodiest security incident in South Africa’s post-apartheid history.
Police broke up a sit-in by nearly 600 miners from a Gold Fields mine demanding the release of colleagues at a police station, about 45 km (30 miles) west of Johannesburg. Seventy-two miners were arrested.
Near Rustenburg, in the “platinum belt” about 120 km (75 miles) northwest of Johannesburg, police fired tear gas and rubber bullets after a march on an Anglo American Platinum mine turned violent. Four protesters were arrested.
Miners at Amplats, as the company is known, will continue their strike on Monday, a labor leader said, even after the company sacked 12,000 strikers.
Evans Ramokga said the strike committee would meet on Monday to discuss “how we bring the management closer to us, how we can engage them.” But he told Reuters that workers were not afraid of more dismissals.
President Zuma’s government has been criticized for allowing the strikes to spread, as well as failure to address yawning class divisions and grinding poverty that still characterize South Africa 18 years after the end of apartheid.
Zuma faces a significant threat from members of the ruling African national Congress who are lobbying for his removal as head of the party at a scheduled leadership election in December. He held a “social dialogue meeting” on Friday with union and business leaders and some cabinet ministers to discuss the economy.
But the meeting appeared to deliver little new: Zuma’s office released a statement pushing the need for improved industrial relations and condemning the violent strikes.
Separately, Mines Minister Susan Shabangu was quoted by local media on the need for the ANC to drop talk of nationalization. Some members of the party have lobbied for increased state intervention in the industry.
Editing by Matthew Tostevin