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August 19, 2013 2:01 pm
Thousands of South African auto-manufacturing workers downed tools on Monday to demand higher wages, halting production at plants across the sector in the first major industrial action of the country’s strike season.
South Africa has developed an important automotive industry, with the country home to seven major vehicle producers, including Toyota, Ford, Mercedes-Benz, Nissan and Volkswagen. It exported 278,000 vehicles last year to Europe, the US and Africa.
Mphumzi Maqungo, national treasurer at the National Union of Metalworkers of South Africa (Numsa), said some 30,000 workers had joined the strike, seeking pay increases of 14 per cent. This compares with an annual rate of inflation of 5.5 per cent in June.
Thapelo Molapo, chair of the Automobile Manufacturers Employers Organisation, an industry body, said plants had been forced to halt production across the sector and warned that the strike would be “very negative”. It could cause major disruption to supplies to both local and export markets and damage South Africa’s reputation as a manufacturing destination, he said.
The National Association of Automobile Manufacturers of South Africa estimates the strike could stop the production of 3,000 vehicles per day, at a daily expense of R600m to R700m ($59m to $69m). It had forecast the industry could reach record production levels this year, with exports rising to 325,000 vehicles, but that will now depend on the duration of the strike.
Toyota, for example, said the unrest would affect the production of 729 new vehicles a day, half of which would be destined for export.
“Even in the circumstances where you will be able to deliver late it’s the reputation that you have to recover from,” Mr Molapo said. “The issue in our industry is not so much whether or not a particular number can be afforded – it’s about what that means for the competitiveness of the local industry.”
The action is also expected to impact on suppliers and other associated industries in what is the first major strike action in the sector since 2010. Then, workers secured salary increases of about 10 per cent amid warnings from companies that wage rises risked damaging competitiveness.
But Mr Maqungo insisted the workers’ demands were fair, adding that the union would consider any increase above 10 per cent. Companies have offered rises of 8 per cent and negotiations are expected to continue.
Strikes erupt regularly in South Africa where unions wield significant power and typically push for above inflation wage increases
“We believe our demands are reasonable and believe that these companies are able to sustain these wages and the other substantive demands we have placed on the table,” Mr Maqungo said.
The auto industry has been one of the bright spots in South Africa’s struggling manufacturing sector, partly because it receives substantial incentives from the government. The sector and its associated industries contributes about 7 per cent of gross domestic product in Africa’s largest economy, which is enduring lacklustre growth.
Strikes erupt regularly in South Africa where unions wield significant power and typically push for above inflation wage increases, which they argue are necessary to lift people out of poverty.
But there have been concerns that worker militancy in the mining sector following a wave of violent industrial unrest last year could spill over into other areas of the economy.
Wage negotiations in various sectors typically occur at this time of year, making it a busy period for industrial action.
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