About 5 500 sugar workers will strike today to demand an 11 percent rise in pay, in the first stoppage in this industry since 1997.
Employers including Illovo Sugar and Tongaat Hulett had offered raises of 8.5 percent, meaning the two sides were “relatively close”, Tongaat chief executive Peter Staude said yesterday.
The strike “has been insisted [on] by members because they want a double-digit increase”, Food and Allied Workers Union (Fawu) general secretary Katishi Masemola said.
“It’s a figure that workers believe they deserve.”
South Africa is already beset by its longest and most costly mining strike, which began four months ago as platinum workers walked off the job at Anglo American Platinum, Impala Platinum and Lonmin.
The lowest-paid sugar workers currently received R5 500 a month, Masemola said. Inflation was 6.1 percent last month, according to Statistics SA.
Fawu, which planned to strike with two other unions, was also requesting a 40-hour working week, a monthly housing subsidy of R800 and permanent employment of fixed-term contract staff, Masemola said. A further 5 000 contract workers might join the strike if they were protected by law, he said.
“We still hold out hope we’ll be able to resolve this issue prior to tomorrow [today],” said Gavin Dalgleish, the managing director at Illovo, where 1 346 staff will not report for duty.
Tongaat would mitigate the effect of the strike by running its mills longer at the end of the year if needed, Staude said. It normally stopped running its mills in November.
Illovo would build stockpiles and “slow down the supply chain to the sugar mills”, Dalgleish said. The strike in 1997 lasted 10 days, he said.
Sugar prices fell 42 percent over three years to last year on NYSE Liffe after growers from Brazil to Australia raised output, leading to a global surplus.
That made the sweetener cheaper to import to South Africa and harmed local producers. Illovo has sought to mitigate the impact by diversifying its business into alcohol-based products, while Tongaat is selling land near Durban for residential development.
“Sugar is a cyclical commodity and we are currently at the bottom end of the cycle,” Dalgleish said.
“We expect this cycle to turn in the short to medium term and thus benefit from the huge growth in Africa.”
South Africa raised the dollar-based reference price of sugar last month, so importers must now pay tariffs on shipments for the first time in four years. Imports of sugar had “dried up” last month and this month, meaning the tariffs were working, Staude said. – Bloomberg