Kamlesh Bhuckory
STRIKES IN South Africa’s platinum and metals industries will contribute to a contraction of as much as 2.5 percent in the steel and engineering sector this year, according to the biggest employer group.
“Up to May, we were expecting the industry to grow at an annualised rate of 3.5 percent,” Henk Langenhoven, chief economist at the Steel and Engineering Industries Federation of Southern Africa (Seifsa), said on Friday. “Then the floor fell out.”
Contraction in the R380 billion industry will add to the woes of a country battling rising inflation, unemployment of more than 25 percent and a weakening currency. Africa’s second-biggest economy is reeling from a five-month strike in the platinum industry and a subsequent walkout staged by the National Union of Metalworkers of South Africa, which affected 220 000 employees.
The strike at the world’s biggest platinum mines reduced annualised growth by 2.2 percentage points in the first quarter, leading to a 0.6 percent contraction in the economy, accord- ing to Reserve Bank Governor Gill Marcus.
While gross domestic product expanded 0.6 percent in the three months through June, the central bank has forecast that the South African economy will grow 1.5 percent this year, the slowest pace since a 2009 recession.
Seifsa agreed to a 10 percent wage increase to end the metalworkers’ strike in July. South Africa’s steel and engineering industry employs about 350 000 people, of which Seifsa represents more than two-thirds.
“The 10 percent was high – we were under huge pressure,” Langenhoven said. “The platinum strike was longer than ever. It was violent. There was a possibility of spillover.”
The four-week strike halted production in the automotive industry due to lack of components, affecting carmakers including BMW, Toyota Motor Corporation and General Motors.
“If our sector can’t step up and recover the production, we are in the danger of losing out on the supply chain internationally, of which the car industry is one important component.” – Bloomberg