Picture: Timothy Bernard.

Johannesburg - As annual wage talks kick off in South Africa, a five-month strike in the platinum sector weighs large and could influence how other unions negotiate pay demands this year.

So far, demands outside the platinum belt look to be in line with previous years, allaying fears of sharply above-inflation hikes that would pile pressure on South Africa's economy, already teetering on the verge of recession.

Still, while the country's longest ever mining strike is not leading other unions into excessive wage expectations, analysts say it is having an effect and some unions may be waiting to see the outcome before pushing for heftier increases.

The main manufacturing union, the National Union of Metalworkers of South Africa (NUMSA), wants steel and engineering employers to raise wages by 15 percent.

That is less than the 20 percent hike it demanded at its last negotiation three years ago, but its rhetoric has been noticeably more aggressive this time round and NUMSA has threatened a walk-out by more than 200,000 workers next month if talks collapse.

At previous mid-year bargaining talks known as 'strike season', unions have posted wage demands up to three times the inflation rate, but these have then been whittled down to final settlements at double inflation or less.

In 2011, NUMSA settled for an increase of 10 percent annually for three years.

Smaller unions' initial wage demands this year are comparable with past years, and above inflation which stood at 6.1 percent in April.

The Food and Allied Workers' Union (FAWU) wanted an 11 percent hike for its members in the sugar industry, but agreed last week to increases of 8.75-10 percent for sugar refining and milling workers to end an 11-day strike.

However, the platinum strike and the Association of Mineworkers and Construction Union's (Amcu) ability to hold out for five months against Anglo American Platinum, Impala Platinum and Lonmin may yet steel others to do the same.

“Other unions are not demanding 12,500 rand but the Amcu effect will be: 'Are they willing to negotiate in good faith?' Negotiation is willingness to move from your declared position,” said Joe Mothibi, a Johannesburg-based labour lawyer at Norton Rose Fulbright.

Amcu's strike, the costliest in South Africa's history, has taken out 40 percent of global platinum production and the prospects of a quick resolution look dim.

The stoppage is estimated to have cost the three companies 22 billion rand in lost revenue and employees nearly 10 billion rand in wages, according to an industry website that constantly updates the tally.

Any sign of a breakthrough by Amcu in the next few weeks could prolong wage talks in other sectors - which typically take weeks at least - as unions press their demands.

“If the mineworkers were successful then other groups may well look at that and say 'If they can do it, we can do it too,” said Gavin Capps, a researcher in the Society Work and Development Institute at Johannesburg's Wits University.



Amcu's negotiating approach has so far failed to gain traction with others, such as the National Union of Mineworkers (NUM), the main union in the gold sector.

Last year NUM demanded basic pay hikes ranging from 15 percent to 60 percent but settled for increases of up to 8 percent for a period of two years.

Amcu, which also represents some workers in the gold sector, rejected that offer and is now seeking permission from the labour court to launch a strike in the gold sector.

Amcu is a relative newcomer to wage negotiations, having only emerged as the main union in the platinum sector in 2012.

Some analysts say the deadlock in the platinum strike may in part reflect Amcu's lack of experience in wage negotiations compared to other unions.

It initially wanted the top-three platinum producers to hike basic wages to 12,500 rand a month, a totemic figure that has become the rallying cry - without any clear explanation - of disgruntled miners during two years of turbulence on the platinum belt.

That demand amounts to a 150 percent increase - around 25 times the current inflation rate.

The union has since scaled back its demands to a basic wage of 12,500 rand in four years from now, which still works out at an annual increase of 25 percent.

By contrast, the three main platinum producers are offering pay hikes of up to 10 percent annually.

“Wage demands are about being realistic. Amcu is a relatively new union as opposed to the more established unions,” said Mothibi at Norton Rose Fulbright.

“The other unions may have done their homework on what is achievable and viable as opposed to just demanding something which is unattainable and might do more harm than good.” - Reuters