ArcelorMittal South Africa is being dealt with separately by the National Union of Metalworkers of SA (Numsa), which has threatened a strike in the metals and associated engineering sectors.

“We are on the verge of signing an agreement,” Numsa president Andrew Chirwa said yesterday.

Numsa was preparing to strike from July 1 after talks over demands for a wage increase in the metal and engineering industries failed, general secretary Irvin Jim said.

“Another strike would seriously devastate this economy,” Isaac Matshego, an economist at Nedbank Group, said. “The manufacturing sector is a key exporter and the moment we have a strike it will put further pressure on exports, which will contract, that will definitely widen the trade deficit.”

Manufacturing, which accounts for 15 percent of the economy, contracted 4.4 percent in the first quarter, according to Statistics SA.

The rand strengthened 0.4 percent against the dollar to be bid at R10.7238 at 5pm yesterday, paring the decline this year to 2.2 percent.

Numsa is South Africa’s biggest union and represents more than 200 000 workers. In negotiations with employer groups it is asking for a 15 percent salary increase.

State-owned power utility Eskom was offering a 4.3 percent rise in separate talks, the union said. Numsa said its lowest-paid workers earned R3 050 a month at Eskom projects.

“We are representing our members’ interests and have told them to ready themselves for a protracted strike if the demands are not met,” Jim told reporters in Johannesburg yesterday. “We want to take our time and that is why we are giving employers a month to consider the demands.”

Labour action this year has dragged the economy to its first quarterly contraction since 2009.

Gross domestic product fell an annualised 0.6 percent in the first quarter amid a strike since January 23 by more than 70 000 members of the Association of Mineworkers and Construction Union in the platinum mining sector. - Bloomberg