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Transnet strike may worsen, raising concerns over impact on economy

The strike entered the fifth day today after a second workers union joined the picket lines in demand for higher wages for its members. Photo: Matthew Jordaan

The strike entered the fifth day today after a second workers union joined the picket lines in demand for higher wages for its members. Photo: Matthew Jordaan

Published Oct 11, 2022


The crippling strike by tens of thousands of Transnet employees could deteriorate into a full-blown industrial action as the employer and workers are still far apart in their salary negotiations.

The strike entered the fifth day today after a second workers union joined the picket lines in demand for higher wages for its members.

This comes as the industry has warned that the strike could worsen Transnet’s financial position and plunge the economy into paralysis after the State-owned freight and rail operator last week declared a force majeure for the second time this year.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) yesterday said a full-blown strike at Transnet seemed unavoidable.

Seifsa CEO Lucio Trentini said such a move would have a serious effect on the economy as it would halt exports and put thousands of jobs on the line.

“A full-blown strike at Transnet, will add to the damage suffered by the South African economy. This will be as bad as load-shedding in terms of economic impact,” Trentini said.

“For an economy battling to maintain momentum this could well be the final nail in the coffin. Transnet having already declared force majeure, we appeal for a constructive approach that seeks to advance the interests of our country.”

Transnet and organised labour have failed to resolve the current impasse in the wage negotiations during a meeting at the bargaining council facilitated by the Commission for Conciliation, Mediation and Arbitration (CCMA).

The impasse could see the South African economy shrink even further in the fourth quarter instead of rebounding as imports and exports operations at major ports grind to a halt.

On Friday, Transnet said there were five vessels waiting outside Cape Town’s Container Terminals, with a further 10 vessels expected over the next SEVEN days.

Business Leadership SA (BLSA) yesterday hailed the CCMA process for mediation as a step in the right direction, but asked that the strike be suspended immediately as it has turned destructive while engagements happen.

BLSA CEO Busi Mavuso said the strike action would make Transnet’s financial position far worse after the group reported that revenue was still below pre-Covid levels for the financial year ending 31 March 2022.

Transnet is carrying almost R130bn in debt, with a huge wage bill of R26.2bn a year making up 66% of total operating costs.

Mavuso said this could trigger further ratings downgrades as ratings agencies were reviewing the group’s sovereign credit rating.

“Several companies have approached Transnet with potential solutions including willingly offering to pay increased fees for Transnet services. There are also further legal options including declaring port workers to be essential workers,” Mavuso said.

“Given the economic situation we are in, this is an option to seriously consider. Without ports operating the whole country could collapse.”

Transnet is offering workers affiliated with United National Transport Union (UNTU) and the SA Transport and Allied Workers' Union (Satawu) between 3% and 4% wage increases with an ex-gratia payment of R5 000 before tax.

However, workers are demanding above inflation wage increases of up to 13%.

Mining companies are losing an estimated R6bn per day due to the strike as they cannot export their commodities abroad.

The Minerals Council last week said that fixing logistical bottlenecks at Transnet could raise mining revenues by R150bn, contributing an additional R27bn to the fiscus.

Old Mutual Wealth investment strategist Izak Odendaal said without the logistical capacity to export greater volumes, there was little incentive for mines to expand production of bulk commodities.

“A key intervention would be to let the mines themselves run the trains or work with trusted and accountable private operators,” Odendaal said.

“The century-old idea that the state needs to be at the centre of key network industries in South Africa is fading but needs to be put to bed once and for all.”