South Africa

SA businesses offer to step in to bring an end to strike action – report

The private sector is set to band together to bring a swift end to the major strike action at the national port and freight company Transnet.

Staff at Transnet, the state-owned company which operates most of the harbours in South Africa are refusing to work unless the company agrees to its demand for a pay hike. And, industry figureheads are concerned that the country’s economy will continue to lose billions as export and import activity falters.

BusinessLive reported that proposals contained in the latest Cargo Movement Report show that business lobby groups, including Business Leadership South Africa (BLSA), Business Unity South Africa (BUSA) and the Durban Chamber of Commerce, agreed to pay an additional levy of R148 per container to Transnet’s terminal handling charges.

Global shopping company Maersk said that the levy would act as an operations stabilizer as a result of the strike at Transnet. It said that a further proposal had been made to include an additional fee which would be allocated to labour in order to incentivize and contribute to their wage increase during negotiations.

If accepted, businesses would need to fork out an additional R110 operations stabilization fee alongside an R38 fuel neutrality fee for all container imports; exports handled at Transnet.

Transnet declared force majeure across all its harbours as employees began to strike, demanding higher wages on 7 October. The protesting unions, namely the South African Transport and Allied Workers Union (Satawu) and the United National Transport Union (Untu) have subsequently been unwavering on a wage increase above the current inflation rate of 7.6%.

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Over 40,000 employees have downed tools. The company itself offered an across-the-board increase of between 4.25% and 5%. The unions have, however, rejected the revised offer by the employer, noting that it is insulting and insufficient in light of the rising cost of living.

Ground to a halt

Bloomberg reported that Africa’s biggest port for iron-ore shipments has all but ground to a halt as about 90% of employees stayed away due to the strike action.

On Monday, approximately 10% of workers were in attendance at the Saldanha terminal north of Cape Town, which has a capacity to export 57 million tons of iron ore a year, according to a letter Transnet sent to its customers seen by Bloomberg.

The labour action has curtailed the number of workers, or so-called manning levels, to 13% or less at most of its bulk and break-bulk terminals, according to the letter signed by Michelle Van Buren Schele, general manager of commercial and planning.

Transnet “continues to provide shipping services to all terminal operators, and to Transnet Port Terminals where they are able meet manning levels,” the company said in a reply to questions. “The situation differs from terminal to terminal in terms of availability.”

Coal and iron ore miners have warned that a prolonged strike will curtail exports and hobble output. Russia’s invasion of Ukraine has boosted demand for the dirtiest fossil fuels and revitalized a shipping route to Europe. South Africa is also the world’s second-largest exporter of citrus fruit after Spain, Bloomberg reported.

The strike will also curb overseas sales of other bulk commodities including chrome and manganese, with key producers like Kumba Iron Ore warning on Monday that export sales may be cut by more than half.

The Minerals Council South Africa warned that existing logistics constraints at Transnet are expected to cost South Africa’s mining industry as much as R50 billion in lost opportunities this year. The strike is costing the economy about R6 billion a day, Busi Mavuso, the chief executive officer of lobby group Business Leadership South Africa, said in a note on Monday.

“The Transnet strike is going to cost the economy billions. It is going to set back our efforts to drive a recovery. It will damage government revenue, robbing it of the resources needed to provide poverty relief,” said Mavuso.

The South African Association of Freight Forwarders (SAAFF) pointed to research that showed that logistics delays to the supply chain cost the economy anything between R100 million and R1 billion per day, while the total cost “is far higher than that”.

“According to the latest SA Revenue Service merchandise stats, R343 billion worth of goods were traded by the country in August,” said CEO Juanita Maree. “If we consider that 70% of merchandise is processed via the ocean modality, the current inactivity blocks more than R8 billion worth of goods each day.

“Combined with the ripple effect, the impact is more than the country can absorb, given the current economic climate.”

Speaking with SAFM, MJ Schoemaker the president of the Professional Body for Supply Chain Management in Southern Africa (SAPICS), for every day the strike continues, it takes 10 days for the supply chain to recover. Therefore if the strike is to last a week, it would take 70 days to recover – over two months.

The government has taken steps to attend to the strike with Thulas Nxesi, the minister of employment and labour, joining the wage talks as an observer to monitor negotiations that could have ‘incalculable damage to the economy.’

According to Satawu, the union is set to hold a meeting with three ministers on Wednesday (12 October), namely: public enterprises minister Pravin Gordhan, finance minister Enoch Godnogwana and Thula Nxesi, the labour minister.

Read: Warning over high meat prices in South Africa, and why chicken is on the menu right now

Artmotion S.Africa

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