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South African unions get wage increases, look strong going into political succession talks

South African unions get wage increases, look strong going into political succession talks

South African unions have wrested hefty wage increases from public and private employers, wielding strikes as weapons at a time of high inflation, strong performance in the key mining sector and government surpluses.
The strength of unions, traditionally allied with the left wing of the governing African National Congress, could become critical with a looming showdown over who will succeed President Thabo Mbeki as president of the ANC and ultimately of the country.
A nearly monthlong strike by public sector unions set the pattern. It shut down schools and crippled hospitals across South Africa before unions representing poorly paid teachers and nurses _ who had originally demanded a 12 percent raise _ got 7.5 percent. Consumer inflation jumped to a four-year peak of 6.5 percent last month.
The mining, metal and engineering sectors have also been hit by strikes. A recent weeklong strike in the fuel sector caused gasoline shortages and prompted panic buying by motorists throughout South Africa.
A strike was avoided in the automotive industry and the National Union of Metalworkers secured a landmark settlement of a 9 percent increase for workers and 9.5 percent for those in the steel and engineering sectors.
In the most recent agreements, in the gold and coal mining sectors, two of South Africa's largest unions on Thursday secured wage increases of between 7.5 percent and 10 percent.
"With the increase in commodity prices, especially in gold, platinum and diamonds ... employers had no excuses," said Frans Baleni, general secretary of the National Union of Mineworkers.
There does seem to be a sense among employers that wage concessions are necessary when times are good. In recent years, workers have had increases that just matched or were even below overall inflation, and they were not keeping up with the higher costs of food, fuel, education and medical care.
Eric Nwedo, who negotiated the miners agreement on behalf of coal producers, said employers had taken into account high inflation and increases in the cost of food and fuel. They wanted to be seen to be "offering increases that will mean something," he said.
"We can't say the coal sector is booming. But the stability of coal prices enables us to deal with issues raised by unions. We believe it is a win-win agreement that takes into account the future sustainability of the industry," he said.
While mining companies face high production costs, the price of gold has increased by about 6 percent. The price of platinum has risen 11 percent this year, seeing profits for Impala Platinum Holdings Limited soar by 75 percent.
Economist Mike Schussler said companies didn't "want to upset the production apple cart."
He said the 26.9 percent increase in income tax and 14 percent rise in contributions to the national unemployment benefits fund showed that salaries in South Africa were growing, especially in the middle-income group.
Schussler said there was a demand for skilled workers from engineers to teachers as well as artisans and some employees were seeing increases of above 20 percent.
Concern that higher wages will only push inflation higher could be addressed by the fact that some of the unions, like NUM, agreed to keep wages at the new level for two years.
Still, foreign investors who may already have been put off by South African labor laws seen as among the most progressive on the continent were likely to be further concerned by the series of strikes.
The government's conservative macro-economic policies, including cutting social spending, put it on a collision course with the country's largest labor federation, the Congress of South African Trade Unions, part of a historical alliance with the governing ANC.
Rudi Dicks, a researcher with the Congress of South African Trade Unions, said workers had been taking home less cash every month, and the prolonged strike showed they were "extremely dissatisfied."
Dicks said the June public sector settlement set the benchmark for the wage talks that followed.
"No settlement has been less than 7.5 percent. It was fundamental," he said, adding that about 39 percent of workers earn 1,000 rand (about US$140; euro100) a month and the average minimum wage is about 2,500 rand (about US$350; euro250).
The ANC has a party conference scheduled in December to choose a new leader, who traditionally is its presidential candidate. Mbeki is barred by the constitution from seeking a third presidential term.
COSATU, which has spoken out against Mbeki's policies on everything from AIDS to Zimbabwe and supports fired deputy president Jacob Zuma in the succession battle, will have an influential voice at the conference.
"It is strategic for labor organization that is also a political partner to be strong," said independent analyst Trenton Elsley of the Cape Town-based Labor Research Service.


Updated : 2021-04-11 05:26 GMT+08:00