Finance Minister Pravin Gordhan became the first cabinet minister to come out with a strong warning that the strikes in the mining sector needed to end and organised labour, business, civil leaders and the government could not rest on their laurels.
Referring to the instability particularly in the mining sector, Gordhan said: “If we do not resolve our labour relations challenges, we will all be losers, we will see deteriorating confidence, job losses and business failures.”
In his budget vote in an extended public committee hearing yesterday, Gordhan said: “The present uncertainty in the labour relations environment in mining and other sectors requires concerted action by organised labour, business, civil leaders and [the] government. There is no room for complacency here: we are all in this together.”
While Gordhan did refer to “pressure” on the rand currency, which had plunged by 24c in the past two days against the dollar, opposition parties focused on the political problems, which needed to be tackled urgently. These included particularly the need to end punitive wage demands, which in turn led to negative investor sentiment and currency pressures.
Investec investment strategist Brian Kantor said the powers of the unions needed to be tackled. These were powers given by the government “and they can be taken away”.
He suggested that secret balloting be abolished for strikes and that companies must stop collecting subscriptions on behalf of unions. “That would undercut the power of unions in one fell swoop,” Kantor said.
A positive move for both workers and employers would be to defer pay hikes in the form of shares in the mines, most of which were declining and unprofitable. “The share [prices] would immediately shoot up with huge benefits for those workers and companies.”
Noting the unions had “overplayed their hand”, Kantor said he did not expect a repo rate cut this week.
While the economy needed one to stimulate growth, there could be no cut “in these circumstances” of a weak rand driven down by the impact of the mining strikes and the deteriorating trade balance.
Opposition parties called for the speedy implementation of the youth wage tax incentive to help mop up the about 5 million unemployed youth.
DA MP Geordin Hill-Lewis said in the three years since Gordhan had announced it, but had not implemented it, 400 000 jobs could have been supported for young people.
“You owe them an apology today,” Hill-Lewis told the finance minister.
Looking on the bright side, Gordhan said: “If we find balanced, fair and socially responsible solutions, we all stand to gain: we will see higher investment, higher employment and improvements in living conditions.”
The African Christian Democratic Party’s Steve Swart said companies in South Africa could not afford damaging illegal strike action.
“We agree we need concerted action,” Swart said.
With the rand having fallen to R9.57 to the dollar during the day yesterday, much of this could be attributed to “trade union brinkmanship”, Swart said, who referred to the 60 percent pay hike being demanded at coal and gold mines by the National Union of Mineworkers, an ANC-aligned union.
Swart appealed to all parties to adhere to a social compact to strike “the correct balance” in meeting the expectations of employees.
ID MP Lance Greyling noted that Gordhan had acknowledged “a rand under pressure” but ascribed this to sentiment.
But Greyling said strong government action was needed. “We need to resolve the labour relations issue in particular in the mining sector. We need to create certainty around South Africa as an investment destination.” This included certainty over the youth wage incentive, the Minerals and Petroleum Resources Development Act and the Licensing of Businesses legislation.
“The government needs to stop talking from both sides of its mouth.”
Meganomics chief economist Colen Garrow said the solution fell in the political sphere. “The problem is labour is part of government [through Cosatu] and while it remains there, no sustainable solution is to be found, unfortunately.”