Strikes hit economy hard

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Copy of PN Ford Cars1 Independent Newspapers. Ford vehicles in storage at the Ford assembly plant in Silverton. Production has been suspended owing to a shortage of parts. Picture: Phill Magakoe.

Pretoria - The wave of strikes in the mining and manufacturing sectors has had an “adverse” effect on the country’s economy, leading to the “steepest” economic decline since 1967, says Statistician-General Pali Lehohla.

As a result, 188 000 South Africans in the manufacturing sector lost their jobs during the first quarter of the year.

Lehohla suggested that the government, through the National Economic Development and Labour Council (Nedlac), use the data when discussing labour matters.

At one stage in about 2006, South Africa’s economic growth peaked at 7.5 percent, which Lehohla described as the “good times”, before it saw a major decline caused by the recession in 2009.

“That recession was followed by the first contraction in the first quarter of this year,” he said.

“The main drivers of this contraction are manufacturing – coming in at -4.4 percent – and mining at -24.7 percent. This has been the steepest decline since 1967,” said Lehohla. During the first quarter the “main drag” was manufacturing and mining.

Lehohla said the strike of 2012 – the Marikana strike – and the latest Amcu strike, which lasted from January until last month, played a major role in the decline.

“Strikes had a negative impact on the manufacturing sector, notably in terms of motor vehicle production in September last year,” said Lehohla.

Regarding what the government should do with the data, he said the “purpose in life is to enlighten and respond using evidence of matters of public concerns. It (data) should feed into the discussions going on currently in society.

“So, releasing these numbers in the context of a restive industrial environment helps to energise the discussion that society needs to have. The question is what must the government do?

“The government must engage these numbers and look at them, analyse them and feed them into Nedlac so that there are more peaceful industrial relations,” said Lehohla.

DA spokesman for trade and industry Geordin Hill-Lewis said the government’s “muddling” and “contradictory approach” to the National Development Plan contributed to the decline.

“South Africa has the potential to do much better. With decisive leadership, the right policy mix and a government committed to job-creating inclusive economic growth, we can grow manufacturing employment and turn the economy around,” said Hill-Lewis.

Meanwhile, Ford has suspended production at its Silverton plant and Japan’s Toyota plans to follow suit as the Numsa strike hits suppliers of car parts.

The two-week-old strike by 220 000 Numsa union members, who are seeking 12-15 percent increases, follows on the heels of a five-month strike in the platinum sector that stunted economic growth and export earnings.

The strike forced General Motors to close its assembly plant in Port Elizabeth a week ago, despite efforts by Labour Minister Mildred Oliphant to mediate between Numsa and employees.

“Production at our Silverton assembly plant has been temporarily suspended due to the strike,” Ford spokeswoman Alicia Chetty said yesterday, adding that only the company’s Pretoria plant was affected. Its other plant in Port Elizabeth was operating normally.

Toyota said it would halt some production from today because of supply chain problems related to the stoppage.

“Toyota will close two production lines from Tuesday (today) at our Durban plant,” spokeswoman Mary Willemse said.

Production at BMW, VW, Mercedes-Benz and Nissan was normal, although company officials said they were monitoring the situation closely.

Other companies affected are construction companies Murray & Roberts and Aveng Ltd, which are working on the construction of two major power plants for Eskom.

Numsa rejected the latest pay offer from employers in the steel and engineering sector on Sunday and called on its striking members to intensify industrial action.

Employers have offered pay rises of 10 percent in the first year, 9.5 percent in the second year and 9 percent in the third year.

But unions also have grievances about the role of labour brokers in the industry and do not want to be bound to a multi-year agreement, preferring a one-year deal instead.


The strike has damaged wider investor sentiment in Africa’s most advanced economy, which is teetering on the brink of recession after the first-quarter contraction caused in part by the platinum strike.

Ratings agency Standard & Poor’s cut South Africa’s credit rating last month while Fitch put it on negative watch.


Analysts have long singled out South Africa’s volatile labour environment as a deterrent to investment. - The Pretoria News

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