Numsa strike will cost economy dearly, analysts warn
Labour analyst warns a strike seems unavoidable and will lead to job losses
A strike in the metal and engineering sector would harm the weakened economy and further delay the construction of the Medupi, Kusile and Ingqurha power stations, analysts said on Tuesday.
The National Union of Metalworkers of SA (Numsa) said on Tuesday it was mobilising its members to down tools after failure to reach a wage deal with the employers.
Although the union would have to wait until Friday, when the management committee of the Metal and Engineering Industries Bargaining Council convenes to issue a strike notice, it had already requested a certificate of nonresolution to the wage dispute.
Numsa is demanding a 15% wage increase, while other unions are asking for 10%-12% and employers are offering a 5.5% wage rise.
Labour analyst Andrew Levy said a strike seemed unavoidable at this stage and warned it would negatively affect an economy already in a technical recession, lead to job losses and company closures, and hit investor confidence hard.
"For SA and in foreign investment, this could not come at a worse time. All in all, it’s going to have a large impact and one of the things I find disturbing is the parties are relatively a long way apart. The union is still saying 15% and employers will simply not afford that or pay it. It is three times the current settlement rate and hugely above the inflation rate," he said.
Levy explained that its ripple effect would raise the cost of projects at power plants. The steel and engineering industry was vital for building anything, operating mines and performing maintenance and development of plants.
According to an analysis by EE Publishers MD Chris Yelland after Eskom’s last year-end results presentation, the cost of completing Medupi, excluding flue gas desulphurisation, had risen to R135bn from the original estimate of R69bn in 2007 and the latest cost estimate for Kusile had risen to R160bn including flue gas desulphurisation, from an original R80.6bn in 2007. Medupi is now due for completion in 2020, eight years after its originally scheduled date, and Kusile in 2022, nine years late.
"All in all if there is going to be a national stoppage in any sector in the private sector, the engineering sector is going to have the biggest impact," said Levy.
Although the parties in the dispute are far apart in terms of demands and offers, the situation in the industry has been worsened by employers’ decision last week to negotiate independently, bypassing collective bargaining altogether.
Numsa said at a briefing on Tuesday that the major point was the proposal by employers to "slash the minimum entry rate by half and impose a poverty wage of R20 per hour, which is half the minimum rate in the engineering sector".