Image: Gallo Images

No Caption

Chris Hart, an economist at Investment Solutions, said: "Because the strikes have not yet been protracted, we're not talking about any major impact yet. But as the strike becomes more protracted, we can expect a negative impact on third-quarter GDP growth. And the slowdown in productivity comes on the backdrop of a global slowdown, which could affect job creation," Hart said.

Dawie Roodt, an economist at Efficient Group, shares this view. "I don't think there will be major impact on the economy yet. A lot of the time with these strikes there is a lot of noise, but very little impact."

Economist Mike Schussler takes a more cautious view. "Generally with strikes, after a week it becomes difficult to make up productivity and so the economic impact will depend on how long the strikes go on," he said.

The Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (Ceppwawu) and the General Industries Workers Union of SA (Giwusa), which represent about 70,000 workers, announced yesterday that they would go on a strike beginning on Monday over wage increases and other employee benefits. The unions represent the petroleum, industrial chemicals, pharmaceutical, glass, fast-moving consumer goods and tissue industries.

This followed the commencement of a nationwide strike in the engineering sector, led by the National Union of Metalworkers in SA (Numsa), with mass action rolled out on Monday. The unions are demanding improved working conditions for workers and an increase in wages of between 11% and 13%, while employers are only offering between 4% and 7%.

Hart thinks that there is nothing wrong with wanting an above-inflation increase, but that it has to be put into context.

Personally, I am not against above-inflation increases but it cannot take place if it damages the economy; it has to be matched with productivity. It is unfortunate that in SA we have built wage negotiations around inflation, but one needs to look at other issues that are related to productivity otherwise SA will not be competitive enough globally," he said.

The consensus among the economists was that the impending Ceppwawu strike could potentially have more of an impact on the economy the longer it continues.

"The petrol strike will potentially have more of an impact because it affects more businesses and more people. But the extent of the damage will depend on how long it goes on for. I mean, can you imagine not being able to get petrol in Gauteng for a week? It could be devastating," Roodt said.

The strikes could affect the economy in other ways, significantly the perceptions of international investors.

Economist Mike Schussler feels, however, that we should be paying more attention to local investors and businessmen, and not only international investors.

"Locally, a lot of people are worried, they want to close down factories, and are looking to doing less business in SA due to things like nationalisation and strikes. So more attention must be paid to easing the mind of our local investors," he said.

Roodt thinks that it's unfortunate that it is considered quite normal for SA to have a "strike season", as he puts it, and that it is something that investors have to unfortunately get used to.

Hart agrees with this sentiment, adding that this also highlights weak labour legislation.

"It is unfortunate that it almost seems as if striking is part of the routine for wage negotiations, which shows the utter failure of our labour laws," he said.

Hart also thinks that these strikes could have a negative impact on job creation and social stability in the long term.

"In the long term, the strike is not just about lost production, but when wage settlements are made for above inflation rates, jobs could be lost and in the long term this will cause social unrest due to poverty," he said