The impact of the strikes in the mining and transport industry will have long-term effects on the economy that can not yet be quantified.
Economists are pessimistic about the long-term impacts of the contagion of strikes that has seized the country these past few weeks. The rand dropped to a three-and-a-half-year low on Monday but on Wednesday, senior government officials gave mixed signals regarding the effect of the strike on the economy.
Speaking in Tokyo, where the International Monetary Fund and World Bank are meeting, Finance Minister Pravin Gordhan said while the strikes, combined with "gloomy news coming from Europe", hurt the rand he was confident the currency would recover.
"I'm sure we'll bounce back and get to some level of new normality," he told Reuters.
Gordhan gave assurances government was "putting immense efforts to bring together the employer community, trade union movement and the government itself in order to stabilise the situation rapidly as possible."
But on the same day Reserve Bank Governor Gill Marcus said the violent strikes in the mining sector and the killings at Marikana hurt the country's international investment reputation. She pointed out the R5.6-billion in net equity market outflows on Monday as evidence of this.
"That's an indicator of a loss of confidence. It's a huge indicator for us of loss of confidence," said Marcus, who described the outlook as "deteriorating rapidly".
Wildcat strikes spread through the platinum belt after Lonmin agreed to a 22% wage hike with non-unionised workers last month. Mining companies have now begun to take a hardline stance towards the strikes, with Implats firing 12 000 workers last week, and Gold One and Bokoni following suit this week.
Increasingly violent
But strikes in the freight sector have shown no signs of abating. Transport unions have demanded a 19% increase over two years and say they will continue to strike until their demands are met.
As the strike action became increasingly violent – with a number of trucks torched and one person set alight, one shot, and another dead after being hit in the head with a rock – negotiations between labour and employers collapsed this week.
The South African Transport and Allied Workers Union (Satawu) accused employers of "walking away" while the Road Freight Employers' Association blamed the unions for the fallout, saying they bargained in bad faith and "shifted the goalposts" by changing their demands.
The employers' association last week said it was losing R1.2-billion for each week that the strike continued.
Economists said the financial cost of the strike on the economy would be difficult to calculate until the strike ended but there was general agreement that the strikes were bad for workers and the country.
Adenaan Hardien, chief economist at Cadiz Asset Management, said the disruption would inevitably lead to a weaker GDP growth figure for both the third and fourth quarter than would otherwise have been expected.
"Not only will you have a sharp slowing in GDP growth over the third quarter, but ultimately there is a chance of having an outright contraction in GDP growth in the fourth quarter," he said.
Bounce-back
Hardien said he expected a bounce-back in both GDP and in the currency once the strikes settled down but added that in the medium and the long-term, the outlook would be slightly more negative than it would otherwise have been.
One inevitable consequence of the high wage increases seen in the mining and other sectors, he said, is higher inflation. "When you have wage demands decoupled from meaningful discussions on productivity, you're going to have inflation," he said.
Efficient Group chief economist Dawie Roodt said production would certainly be lower than it would have been had it not been for the strikes.
"This is bad stuff. It will make South Africa less attractive as an investment destination, and that leads to weaker currency and less investment," he said.
Roodt said he expected GDP to slow in the near term but the currency would probably bounce back, as Gordhan said, largely because of the bond market, which he said was "sophisticated, liquid and still provides very high yields".
"I expect the rand to gain as soon as we get a bit more clarity and stability," he said.
Dave Mohr, chief investment strategist at Citadel, said the economic impact would be assessed primarily through the impact of business confidence, both locally and internationally.
Securing an increase
He raised concerns that the 22% increase secured by miners at Lonmin created the impression that unions would be able to secure settlements well above inflation. But taken against the backdrop of deteriorating economic conditions these could result in fewer job opportunities in the long run, he said.
Economist Iraj Abedian meanwhile said another concern was that the country's reputation for unstable labour relations would discourage medium-sized companies from expanding beyond 100 employees, as they would then be subject to the Labour Regulations Act, and have to deal with unions.
Abedian said the strikes, which would have long-term consequences for workers, were a problem created by unions that fail to communicate continuously with the labour force.
"[Unions] are bedevilled by a breed of union leaders who are more proxy political players than effective union leaders," he said.
"If you're an effective union leader in between negotiations, between strikes, you take care of the interests and the genuine welfare of the workers so as to avoid disruptions, knowing that disruptions are bad for workers. But union leaders are more politicking than doing what union leaders should do," he said.
Abedian said the damage to industrial relations would translate into damage in investor confidence, which would be bad for economic growth, job relations and government tax revenue.