JOHANNESBURG (Reuters) - South Africa’s local government workers’ union said on Monday it would launch a strike over pay in the next few days, the first sign of a wave of labour unrest in Africa’s biggest economy spreading from the mines into the public sector.
Since August, close to 100,000 workers, including 75,000 in the mining sector, have downed tools in often illegal and violent protests that look likely to hit growth this year and undermine the government’s efforts to cut its budget deficit.
Finance Minister Pravin Gordhan has promised to reduce the deficit from the 4.6 percent of GDP forecast for this financial year. Any public sector wage increase would make that more difficult.
“The union is mobilising towards a national protest, which would begin as soon as this week,” South African Municipal Workers Union (SAMWU) spokesman Tahir Sema said.
A majority of SAMWU’s 190,000 members are expected to join the strike for “market-related salaries” which may last for one day or drag on indefinitely, Sema said.
The strikes, which started in the platinum industry and spread to other mining companies and beyond, have raised questions about President Jacob Zuma’s leadership and tarnished South Africa’s reputation among foreign investors.
The rand fell to a 3-1/2 year low against the dollar on Monday, while the cost of insuring South African debt against default increased, reflecting worsening investor sentiment toward local assets.
“International investors are really quite concerned around South Africa,” said Mohammed Nalla, an analyst at Nedbank Capital in Johannesburg. “Structurally and fundamentally, the outlook on the rand is deteriorating.”
Moody’s cut South Africa’s government bond rating last month, citing the government’s difficulty in keeping up with economic challenges and widening strikes.
Wildcat strikes have already shut down large parts of the mining industry in the world’s top platinum producer and a major supplier of gold, pushing prices of precious metals higher.
Xstrata is the latest victim, with workers at its Eland platinum mine walking out on Friday.
The mine is expected to produce 176,000 ounces of platinum this year, compared with forecast production nationwide of 4.9 million ounces of the precious metal used in jewellery and vehicle catalytic converters.
Anglo American Platinum (Amplats) fired 12,000 wildcat strikers on Friday, a high-stakes attempt by the world’s top producer to squash illegal stoppages that have hit output at seven of its mines.
The dismissed workers were defiant and threatened a repeat of the showdown with security forces at rival Lonmin’s Marikana mine that led to the police killing of 34 miners on August 16, the bloodiest such incident since the end of apartheid in 1994.
“Those who are dismissed will make sure that there will be no operations operating and that will cause a massacre just like at Marikana,” said one worker representative, who asked not to be named.
Other affected mining firms include Kumba Iron Ore, which was forced to declare “force majeure” to free itself from supply contracts after losing 120,000 tonnes of output per day from its giant Sishen mine.
AngloGold Ashanti, the world’s third-largest bullion producer, warned that a prolonged strike could lead to the closure of marginal shafts and job losses, but said it was not considering mass sackings.
A strike by more than 20,000 truck drivers entered its third week on Monday, hitting logistics companies and leading to filling stations running out of some grades of fuel. Wage talks with employers were expected to resume on Tuesday.
The main transport union, SATAWU, said it was gearing up for a one-day rail and port worker strike on October 15, which could hit exports of coal and other minerals.