Prolonged strike action threat to job creation

Tuesday, July 12, 2011

Pretoria - As strike action continues to grip the country, experts have warned that job creation could take a major blow.

"We need to bear in mind that the economy is recovering from a downward turn and manufacturing hasn't really taken off as it should. The manufacturing sector is highlighted in the IPAP 2 - it is a key industry and we need growth in that sector," Executive Advisor to the CEO of the South African Chamber of Commerce and Industry, Peggy Drodskie, said.

Drodskie cautioned that strike action will make it hard to achieve the targets of New Growth Path, which aims to create five million jobs in the next decade. The plan estimates that over a million jobs in infrastructure development and housing will be created, with 500 000 in the agricultural sector and 350 000 in manufacturing.

Forty-one percent of the working-age population in the country have regular work.

Last week, the National Union of Metalworkers of South Africa (Numsa) embarked on a nationwide strike, with workers demanding pay increases of between 10 to 13 percent. Under Numsa's leadership, thousands of engineering workers are also demanding a ban on labour brokers.

NUMSA is joined in this by the Metal and Electrical Workers' Union (Mewusa) as well as the SA Equity Workers' Association (Saewa).

On Monday, members of the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (Ceppwawu), the South African Chemical Workers' Union (Sacwu) and the General Industries Workers' Union of SA (Giwusa) - which has members in the glass, pharmaceutical chemical and fast-moving consumer goods, fibre and particle board industries - joined the protests.

The strike action has raised fuel shortage fears.

On Tuesday, members marched to the Chamber of Mines in Johannesburg. Workers also gathered in Durban, where they were scheduled to hand over a memorandum to the Steel and Engineering Industries' Federation of SA (Seifsa).

NUMSA spokesperson Castro Ngobese said other union members were picketing outside workplaces on Tuesday.

Drodskie said the strike also has bearing on the pockets of workers who will experience a loss of salaries that could occur because of the 'no work no pay' policy. This is in addition to a loss of possible profit as a result of pickets, and workers who are not on strike losing their productivity due to possible intimidation by striking workers.

"Workers will also be impacted. The no work to pay rule means that income will no longer be available to the economy, which will have an effect on the everyday living of workers," she said.

Drodskie said that strike action makes employers reluctant to take on extra staff. "This impacts job creation," she said.

On Tuesday, Seifsa said bilateral negotiations between itself and Numsa at the weekend and on Monday, aimed at resolving the strike, have been unsuccessful.

"The differences between the two parties at this stage are substantial and it appears unlikely that an early resolution to the strike is possible," said Seifsa executive director, David Carson.

Carson said the employer negotiating team would report back to the main employer group at a meeting tomorrow afternoon, with the possibility of a further negotiating meeting being convened shortly thereafter.

Meanwhile, Nedbank senior economist Isaac Matshego said the strikes -- which are key to the manufacturing sector in particular -- impact on the economy could have a significant impact on the economy.

The sectors contribute about 40 percent to the manufacturing sector, which contributes about 15 percent to the country's economy.

Asked about whether the demands of the labour were reasonable, Matshego said looking at food prices, the petrol price and electricity costs, "you would agree that workers need compensation."

He, however, he added that prolonged industrial action could be detrimental to the economy.

"Strike action can lead to our economy not reaching its growth potential," he said, adding that the impact of the strike could be felt into the second quarter of the year.

"Manufacturing could contract in the second quarter. I would not rule out the possibility that it could spill out over two consecutive quarters into quarter three," explained Matshego.

Strike action did not bode well for investors. "It does not send a very good message, especially if it is prolonged. There are other countries competing with South Africa for investors," said Drodskie.