Who benefits from strike as mineworkers and SA lose?

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The value of opportunities lost is impossible to quantify and the full cost of the longest strike in South Africa’s mining history will never be known. But an indication of the scale of the damage comes from recent data. In Australia, first-quarter growth beat expectations – largely due to a surge in mining exports. In South Africa, first-quarter growth disappointed – mainly due to the protracted mining strike and the domino effect on manufacturing.

Australia’s Bureau of Statistics reported last week that gross domestic product (GDP) grew 1.1 percent in the first three months of the year compared with the previous quarter and 3.5 percent year on year.

“This was above market expectations and the first time in two years that the growth rate rose above 3 percent,” the Sydney Morning Herald reported, adding that the mining industry contributed about 80 percent of the surge.

But in South Africa, GDP shrank an annualised 0.6 quarter on quarter between January and March, and rose only 1.6 year on year. This came after 70 000 miners, who are members of the Association of Mineworkers and Construction Union (Amcu), went out on strike on January 23, demanding a R12 500 basic monthly wage for entry-level workers.

Annabel Bishop, the chief economist at the Investec group, noted that mining contracted nearly 25 percent in the first quarter, on an annualised basis, while manufacturing shrank 4 percent. She said the GDP outcome was the worst since the 2008/09 recession and was partly due to strike action.

The miserable performance of the two sectors has eroded local exports – the country has a cumulative trade deficit of nearly R41 billion for the first four months of the year. This leaves the country dependent on the savings of foreign investors to fund its import bill. Without this investment inflow, the economy will shrink.

And the striking miners’ loss of income has spilled over into the consumption sector. As earlier sources of credit dry up, miners’ families – an estimated 10 dependants to each miner – are living on handouts or going without. In March, retail sales fell 1.4 percent compared with the previous month and rose only 1 percent year on year.

Businesses on the platinum belt are closing for lack of customers and industries supplying the mining sector are contracting.

Platinum mining companies are cutting jobs and will undoubtedly be shedding more, whatever the outcome of the strike.

The dismal outlook follows growth of 1.9 percent last year and 2.5 percent in 2012. Reserve Bank governor Gill Marcus has said the economy is not moving into recession and has forecast growth of 2.1 percent this year. But Investec’s Bishop warned: “GDP growth is at risk of approaching 1 percent.”

The country is trapped in a vicious cycle, with slow growth boosting unemployment and rising unemployment dragging down growth. The unemployment rate, already over 25 percent, is likely to worsen as business and consumer confidence fades.

These are the costs. What are the benefits?

Gideon du Plessis, the general secretary of trade union Solidarity, writing on the website BizNews.com in March, said: “According to Solidarity’s Research Institute, one month’s strike is equal to a loss of at least 8.3 percent of an employee’s annual income. So to balance out the loss of the strike over a period of a year in gross terms, the difference between the employer’s initial offer and the increase granted after the strike must be more than 8.3 percent.”

And he warned: “This rarely happens.”

The calculation for the current strike will have to wait until a settlement is agreed. Meanwhile, miners have lost R9.4bn since the strike began and the mining companies have lost more than R21bn in revenue, according to the website platinumwagenegotiations.co.za.

The final tally will also have to take into account upcoming job losses. While miners who keep their jobs may reap the benefits, those without jobs will be the sacrifice that Amcu has chosen to make.

Du Plessis noted: “It is about time the working class begins to realise that you only go on strike when a matter of principle is at stake, for you can never make yourself rich by striking.”

Amcu president Joseph Mathunjwa has his own agenda. A former member of the National Union of Mineworkers (NUM), he is scoring points over the NUM and establishing his profile. Who knows where it will lead him and what benefits will accrue to him as a result.


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