/ 29 July 2009

Strike enters third day, cost mounts

A strike by tens of thousands of South African council workers entered its third day on Wednesday, disrupting local government services and keeping pressure on President Jacob Zuma.

The strike is the latest stand-off between Zuma and the unions who helped sweep him to power in an April election and now want the president to fulfil his promises to help lift the living standards of the poor.

South Africa is suffering its first recession since 1992 which unions say has hit the country’s poor hardest. Unemployment is rising with over four million South Africans without jobs, according to official data.

Economists believe the higher-than-inflation wage settlements reached in a number of sectors this month could strain Africa’s biggest economy further down the road.

The country, already facing a shortfall in tax revenue due to the economic crisis, may be forced to increase taxes and the wage settlements could fuel inflation, which currently stands at 6,9% annually.

The economy may also lag other global economies in recovering from the global financial crisis.

”Often when economies recover after a crisis there is a boost to productivity given increased output but lower levels of labour and wages, the US after 2001 is the prime example,” said Peter Attard Montalto, emerging markets economist at Nomura International.

”With such heavy unionisation South Africa risks not benefiting from this productivity boost and hence will fall down the league tables of competitiveness of investors. Higher wage growth also feeds through to inflation through consumer demand”.

Millions lost in wages
Mike Schussler, economist at economists.co.za, estimated that council workers were losing about R15-million in wages a day, but said it was not possible to quantify the cost of the strike to the economy.

The South African Municipal Workers’ Union, representing about 150 000 council workers, said its executive would meet later on Wednesday to consider an improved offer from employers.

The union is demanding a 15% increase and said 70% of council workers earn less than the R5 000 monthly minimum wage it is demanding. Employers have tabled a revised offer of an effective 13% increase.

Pressure on the government eased on Tuesday after South Africa’s biggest union agreed a wage deal with gold and coal producers — averting a potentially damaging strike in the key mining sector.

Strikes in the paper, industrial chemicals, pharmaceutical and petroleum sectors were called off this week after wage settlements. Unionised workers at the South African Broadcasting Corporation and Telkom embarked on a two-day strike on Wednesday.

The strike by public transport workers, refuse collectors and licensing officers follows days of violent protests by residents of impoverished townships who have complained about lack of healthcare, water and electricity.

Police have warned motorists of traffic disruptions in the Johannesburg central business district on Wednesday as striking council workers plan a protest march to local government offices.

Residents who live in the central business district said the strike has hit normal services hard.

”It is actually terrible. There are litter everywhere, bricks on the road and rubbish all over. It is the worst I have seen the city look ,” said Bongani Ndhlovu, who has been living there for three years. – Reuters