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Heading for a winter of discontent?
Barely two weeks before South Africa’s 2010 Fifa Soccer World Cup (WC) tournament kicks off, the country is facing another bleak winter of discontent on the labour front, with ongoing and looming labour actions that could cripple the country. It is turning out to be the greatest potential threat to the successful hosting of the WC. It could also threaten the country’s post-recession recovery and increase the strain on relationships in the ANC-led governing Alliance.
Not only is the ongoing transport sector strike now threatening serious disruptions of national petroleum supplies, but other planned strikes could disrupt electricity supplies nationwide and paralyse the public service. Some economic sectors have already suffered serious losses and the cost to the country is heading in the direction of billions of rands.
The ANC has voiced its serious concerns to the Congress of South African Trade Unions (Cosatu) that labour is using the WC to blackmail government and state enterprises, but Cosatu has effectively told the ANC and government to 'take a hike'. Another factor that has crept into the uneasy situation is Cosatu pointing out that while workers are being asked to make concessions and sacrifices, company executives and government members continue enriching themselves, with Cosatu emphasising the exorbitant pay hikes, bonuses and benefits that company bosses award themselves in one of the economically most unequal societies in the world.
The transport sector strike has now entered into its third week after the United Transport and Allied Trade Union (Utata), which is affiliated to the Federation of Trade Unions of SA (Fedusa) and represents about 20 700 of the estimated 46 000 workers who originally went on strike, late last week had accepted management’s 11% pay rise offer.
However, the SA Transport and Allied Workers’ Union (Satawu), which is affiliated to Cosatu and represents about 18 000 of the striking workers, wanted more time to consult its members and decided to continue striking, holding out for a pay rise of 13% after initially having demanded 15%.
In the interim, the strike had been extended to commuter train services, with Metrorail saying services were running at about one-third capacity at the start of the week.
The strike is having a devastating effect on the economy and continues to adversely affect exports of South African wine, cars, fruit and commodities, with several mining companies having to declare force majeure on shipments, unable to supply their customers.
Particularly iron ore and coal exports have been hard hit. Now coal supplies to Eskom’s largest power station could also be affected, possibly resulting in power outages; while the petroleum industry fears the strike could affect the movement of petroleum products from refineries and depots, thus disrupting petroleum supplies to inland areas.
The oil companies and refineries rely on Transnet to move their products which, if this is not done, causes bottlenecks at the refineries and depots. It could cause refineries to scale down operations, a complicated procedure. In a worst-case scenario, fuel supplies to the country’s airports could also be affected just as hundreds of thousands of soccer tourists are scheduled to start flying into and around the country.
So far, the petroleum industry’s saving grace has been the fact that the Competition Commission has exempted the petroleum industry from prohibitions on companies from sharing information and co-ordinating their activities with a view to ensuring regular fuel supplies during the WC. Whether they can hold out and ensure regular supplies much longer, is another question, they say. Satawu and Transnet are scheduled to hold more talks today.
In the interim, Satawu wants to continue with plans to expand the strike by serving sympathy strike notices in the transport sector, including road freight hauliers and private port-related companies. When the ANC raised its concerns with Cosatu over the strike so close to the WC, the labour federation said it would not back down and asked the ANC to ask Transnet management to re-examine its lucrative salary and bonuses for managers and executives.
On Wednesday, the Cosatu-affiliated National Union of Mineworkers (NUM) will embark on a strike at Eskom, putting the country’s electricity supply further at risk. This comes at a time when the annual winter rise in consumer demand is under way and fears have already been expressed that Eskom’s pressured national supply capacity could come under serious pressure during the WC.
The planned NUM strike at Eskom was suspended last year pending further negotiations led by a task team to address all outstanding issues from last year's negotiation cycle, including a housing allowance. However, according to the NUM, no progress was made and Eskom failed to respond to several memoranda and demands. As a result, the union, representing 10 000 workers at Eskom, will now embark on strike action.
If the strike action is well supported by workers, it could bring Eskom’s operations to a standstill, cutting off electricity supplies to winter-exposed consumers and vital industries, including mining, which are still struggling to shake off the effects of the recession. This could also have negative impacts on the already critical employment situation in the longer term.
Cosatu’s public sector unions are also threatening to call on more than 500 000 government employees to down tools in the next few weeks, which could seriously disrupt government services - with adverse affects for the WC once again.
In addition, Cosatu is threatening a nationwide strike by all two million of its members during the WC over Eskom’s electricity price increases. The federation said it would announce a date for this planned strike action after its central executive committee [CEC] meeting this week.
Not only will such a strike disrupt the soccer spectacle and cause serious harm to the economy, but it will also put political pressure on the government of President Jacob Zuma. With power outages causing more hardships and more jobs being lost, social frustration levels will rise and could lead to fresh outbreaks of violent protests in townships across the country.
Zuma and his government find themselves between a rock and a hard place. While Cosatu is the ANC’s junior partner in the governing alliance, the ANC government is being held to ransom by its own partner to enforce economically contentious measures in state companies in which the same government is the sole shareholder. This unholy situation is tantamount to Cosatu holding the ANC’s hand while forcing it to shoot itself in the foot.
Whether they (The Unions) like it or not, earnings are about supply and demand. I agree that the disparity in earnings between top and bottom is massive, but there is also a huge over- supply of unskilled and semi skilled labour in SA, and a shortage of highly skilled executives, (many of whom own the businesses which pay them great salaries) An over supply of anything, including labour, results in a decrease in price. (It's like gravity- You can't break this law and survive.) If the price is falsly inflated (as with strike action) the oversupply (Unemployment) will increase. However, if market forces were allowed to act, wages would come down, more people would be employed, crime would decrease, and as the oversupply diminished, so the wages would rise....Gradually and Sustainably! This would make us globally competitive. However, labour unrest, combined with rigid labour laws, discourage entrepreneurs from employing people. They either buy machines, or invest in other investor friendly countries. It is my perception that our workers don't understand that they are competing with labour in other countries to sell their labour... and losing. Why are we all surprised when when unemployment rises?