'Strike season' mars South Africa's growth

In South Africa, they call it the "strike season." It's an annual mid-year wave of labour walkouts and wage negotiations that often culminates in destructive rampages by striking union members.

The season is almost over now, and it's been a bad one. To cap it off, striking municipal workers in Cape Town went on an orgy of looting and arson this week, stealing from street vendors, smashing car windows and setting fire to rubbish bins.

The union violence has become predictable in South Africa, where the labour movement is politically powerful and closely linked to the ruling African National Congress, but its predictability has not lessened the damage to the national economy.

The looting and destruction in Cape Town were inflicted by some of the 200,000 municipal workers who launched a strike to demand an 18 per cent wage increase – more than three times the inflation rate. Strikes are also being threatened by workers at the South African electricity monopoly, the national post office, the national telephone company, and the platinum mining industry.

Analysts are already forecasting that South Africa's economic growth this year will be dampened by the strikes. A recent work stoppage by 100,000 mine workers at three major gold companies, for example, temporarily halted gold production of up to $25-million (U.S.) a day.

Overall, the strikes in the mining and fuel industries have caused more than $200-million in lost output in the current strike season. A year ago, a wave of public-sector strikes was even more damaging. It shut down schools, disrupted hospitals, and cost the South African economy about $150-million a day.

Partly because of the frequent labour unrest, South Africa's mining industry is widely seen as more unstable and more expensive than others in the developing world, and the latest strikes will add to that perception. Strike settlements in the mining sector this summer have provided wage increases of 7 to 10 per cent, significantly above the inflation rate. Unions, for their part, argue that their members are suffering from the rising cost of fuel and food – an argument that has some validity to it.

South African analysts are concerned that the labour turmoil will cause further harm to the country's image, deterring foreign investment in the country. Some investors, including Canadians, have already been badly affected by the labour unrest in South Africa.

Eastern Platinum a Vancouver-based platinum producer with a major mine in South Africa, suffered disruption to its output in May as a result of what it called an illegal strike by 480 workers and a "sit-in" by 155 workers. The company said it was forced to suspend operations because some of its underground electrical and pumping equipment was sabotaged in an "illegal occupation" that led to flooding in the mine.