Author: Andre Venter Source: UASA
UASA Media Release
Embargoed: 12:00 on 30 April 2014
Strike action in South Africa: Are we losing control?
Statement by Andre Venter, spokesperson of the trade union UASA:
UASA has, for the past couple of years, observed how the number of man-days lost due to strike action increased and how the intensity of strike action in terms of violence and the destruction of economic value increased.
Despite being a trade union, we are very concerned about the current state of affairs. As a consequence, Economist Mike Schussler, who hitherto researched and presented the previous twelve UASA South African Employment Reports, will speak about the real cost of the strike action in all respects and to all concerned. His findings will be contained in the 2014 (volume 13) of the UASA South African Employment Report which will be released at the Johannesburg Country Club in Auckland Park this morning.
Strikes in SA and the current Platinum strike in numbers.
Background to the current strikes:
Going back into South Africa history it does seem that the duration of the current platinum strike is the longest. The biggest private sector strike according to academics was the 1987 miners’ strike; but the current strike at the three platinum miners is certainly far longer. With only about a quarter of the workers involved but at four times the length, it certain is as damaging, if not more so, as a further 19 000 contract workers have also lost their income and another 55 000 others have lost at least part of their income from overtime and bonuses, says Mike.
In recent years strike action has been increasing and this is also filtering into the way people think about South Africa. When comparing strike rates per 1000 workers it is clear that South Africa is moving up in the wrong direction when comparing strikes.
The public sector strikes have involved more workers and in 2010 resulted in South Africa having a higher number of workdays lost per 1000 workers than the UK had in 1979 – the winter of discontent or during their miners’ strike in the early 1980’s. It is clear that South African strikes are becoming longer, more disruptive and often violent. This this where South Africa is gaining the wrong reputation.
The number of people affected by the long and hard platinum strike is around 125 000. Moreover, at least another 25 000 suppliers and others such as retailers have been affected. But this number could be as high as 80 000, or even more, as the strike continues. Therefore it is likely that the strike is affecting at least 150 000 or perhaps even more than 200 000 people in employment.
With family members (dependents) also affected it is likely that at least 700 000 people have been negatively affected by the strike.
Adding all the workdays lost since the start of 2012 in the platinum sector, it is clear that over 8 million man days have so far been lost. This equals more than 42 days lost per person working in the sector in less than two and a half years. (This is nearly eight weeks of production time per employee and this is an extremely high number even in the South African context)
The costs on employees are high and unlikely to be made up.
While the right to strike is the most important economic weapon of each and every worker, it becomes self-defeating in such a long drawn out affair. Moreover the losses that lower end and average employees have suffered up to now are unlikely to be made up, no matter what the eventual settlement is going to be.
Entry level workers have so far lost R26 775 (even after taking into account that taxes were not paid) per person in wages alone. Add a further R 5016 in benefits plus variable bonuses, they have lost over R42 000 each. Average employees have lost R39 251 in guaranteed after tax wages alone while overtime and benefits would lift their losses up to nearly R65 000 each so far.
0ver 26% of the year has now been disrupted by the strike and after tax wages lost now make up at least 22%. Assuming that the average platinum mine worker has the same debt levels as the average South African Household, the interest alone would push this level up to about 25%. To make this up, however, the after tax salary total income would have to increase with 37% for entry level workers.
Average workers would need over 42% more after tax income, since they pay more in taxes their higher the salary gets. (The average employment figures are derived from annual reports and excludes top management)
The often forgotten non-striking employees normally earns between 40% and 50% extra in the form of overtime and production bonuses. This makes up (@40% extra) about 25% of their monthly income. As shown in the 2013 Employment Report, the average employee has less than 17% of their discretionary salary. This means the strike causes many of them not being able to keep up with their financial commitments.
The Economy is also losing the platinum belt.
The economy has so far lost about 0,4% of its economic growth for the year as a direct consequence of the strike. This is because the mining industry is a primary industry and although it does not keep all the income for itself it buy mainly from other South African firms.
The lower spending by both employees and contractors (who jointly lost an estimated R8 billion so far) will spend less on SA retail. Banks and micro lenders will also make losses because people cannot pay back money owed and for a long time, the actual ability to spend by many will be very constrained.
Moreover, the suppliers who are closing down or working less and therefore paying less will also have a spending impact in the Rustenburg; Brits and Thabazimbi areas. The confidence levels in the South African economy affecting things like house sales, building activity etc. will also be substantially lower over the coming months as both households and businesses feel will feel the cold wind of the strike for some time to come.
Although the economy can recover, the time taken to do so might take longer since the process of starting work and earning extra income will again take time. In the meantime, South Africans will see the effect in the Current Account as lower platinum sales will hamper exports. (For seven years to 2011, Platinum was the number one earner for SA and despite recent strikes was still in the number 2 or 3 position). The current account which is already weak will probably negatively influence the Rand meaning that inflation and buying power of consumer will also be negatively influenced.
Strikes are normal in a democracy, but such long and violent strikes are self-defeating and hurt all the role players, especially the employees. The employees are by far the worst affected, concludes Mike.
For further enquiries or to set up a personal interview,
contact Mike Schussler 082 417 5542 or Andre Venter on 083 251 3274