UPDATE 2-SAfrica transport strike fizzles, more protests loom

* Biggest union says majority of workers favour deal

* Power utility Eskom faces strike starting Wednesday

(Recasts, adds details)

By Agnieszka Flak

JOHANNESBURG, May 20 (BestGrowthStock) – South Africa’s transport
sector strike that paralysed the country’s ports and railways is
likely to be resolved by Friday, but another protest looms at
state power utility Eskom ahead of the World Cup.

The transport strike, in its second week, has dented exports
of metals, cars, fruit and wine to Europe and Asia and hit
imports of vehicle parts and fuel supplies just three weeks
before the start of the World Cup in June.

By holding the strikes close to the World Cup, workers may
be holding state-owned entities to ransom ahead of the soccer
event being held on the continent for the first time.

A series of industrial actions in the past few weeks have
attracted criticism from economists and the central bank who say
the workers are using the World Cup to push for wage hikes above
inflation of 5.1 percent.

They say this could hamper the South African economy’s
ability to recover from its first recession in 17 years.

“Unions appear to be pushing their pre-World Cup leverage to
the hilt, and the (President Jacob) Zuma administration is
facing this pressure with a fairly weak hand,” Eurasia Group
said in a recent note.

A threat by the two-million-strong COSATU trade federation
to hold a nationwide strike over power price increases during
the soccer event could also add pressure on Zuma, while a
flare-up of violent protests by the country’s poor for better
housing and jobs may worsen matters.

The threat of a strike by a large number of workers at Eskom
over a long-standing pay dispute starting next Wednesday could
disrupt power supply in Africa’s biggest economy. [ID:nWEA3067]

Striking transport workers are under pressure from
government to end the strike, while the workers themselves are
feeling the pinch because they are not paid while on strike.

Economists have estimated losses in the hundreds of millions
of rand, but this would rise to billions if the strike dragged
on, and it may take weeks to clear the backlog at the ports.


The strike has hurt global firms with units in South Africa.

Anglo American Plc (AAL.L: ), Xstrata (XTA.L: ) and the world’s
top steelmaker ArcelorMittal (ISPA.AS: )(MT.N: ) have declared force
majeure on the supply of iron ore, ferrochrome and steel
respectively. Transnet also declared force majeure on coal
destined for export. [ID:nLDE64I2B8]

So far coal exports to power plants in Europe and Asia have
not been affected because of stocks at the Richards Bay Coal
Terminal which are enough for about two weeks, traders said.

The strike appeared to fizzle after the United Transport and
Allied Trade Union (Utatu), which represents the majority of
workers at Transnet, said most of its members favour a proposed
pay deal, and would resume work on Friday. [ID:nWEA3331]

Smaller union South African Transport and Allied Workers
Union said it needed more time to gather the votes of its
members on the proposed agreement.

The new offer raises the minimum wage, and gives a one-off
payment and a promise to hire more contract workers on a
permanent basis, but the wage rise is unchanged at 11 percent.

Both unions — which represent 85 percent of Transnet’s
54,000 workers — had initially wanted a 15 percent wage raise.

An agreement to end a parallel strike affecting millions of
commuters may be signed on Thursday, Utatu said, but with an
agreement that an outstanding issue would be settled by June.

For a Q&A on South African strikes, see [ID:LDE64J0V6]

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(Editing by James Macharia)

UPDATE 2-SAfrica transport strike fizzles, more protests loom