South African labor unrest spreads, gold, construction strikes loom

Reuters News
Posted: Aug 22, 2013 4:47 AM
South African labor unrest spreads, gold, construction strikes loom

By Sherilee Lakmidas and Ed Stoddard

JOHANNESBURG (Reuters) - South Africa's labor unrest widened on Thursday as tens of thousands of construction workers prepared to down tools next week and unions in the gold sector also signaled their intention to call a strike over wages.

The escalating industrial action spelled more trouble for Africa's largest economy, which was hit last year by a wave of violent wildcat strikes in the mining sector that cost billions of dollars in lost output, dented growth, and triggered damaging sovereign credit downgrades.

The labor strife has also battered the rand, which dropped to a new four-year low against the dollar early on Thursday after wage talks in the gold sector stalled and the main mine union said it planned to ask members to vote on a strike.

National Union of Mineworkers (NUM) spokesman Lesiba Seshoka said the union would be consulting its gold industry members over strike action in the next few days.

"The earliest we will issue companies with notice of the strike is Monday next week," he said.

With such notice normally being given 48 hours in advance of any action, this meant that a stoppage in the gold industry, which is the country's biggest export earner, could start on Wednesday.

NUM represents about 64 percent of the roughly 140,000 miners in the South African gold industry, where major operators include AngloGold Ashanti, Gold Fields, Harmony and Sibanye Gold.

Seshoka also announced that NUM's 90,000 members in the construction industry would go on strike from Monday.

"It's over wages, we could not agree on wages. We have been in negotiations for three months now," he said.

The construction stoppage would affect major companies in the sector including Wilson Bayly Holmes Ovcon, Aveng Ltd and Group Five Ltd.

South Africa's faltering economy is already losing an estimated $60 million a day to a strike by 30,000 workers in the car manufacturing sector that accounts for 6 percent of gross domestic product.

The auto strike entered its fourth day on Thursday and has affected global carmakers operating in South Africa, including Toyota, Ford and General Motors.

In the gold sector, companies are being squeezed between growing worker militancy over wage claims that have added to costs, and falling bullion prices.

Labor accounts for over 50 percent of costs and gold's spot price is 30 percent lower than the record peak of over $1,920 an ounce it reached almost two years ago.

About half of the country's shafts are losing money at these levels, the industry says.

(Additional reporting by Dave Dolan; Writing by Pascal Fletcher; Editing by Jon Herskovitz)