What is the state of industrial relations in South Africa?
When discussing Cosatu’s recent actions, contextualise the discussion against the backdrop of the current state of industrial relations in South Africa.
Unfortunately, the picture is bleak indeed with the rising tensions and violence having a significant economic impact and inevitable job losses.
SA’s credit rating dips
Investor Services recently downgraded South Africa’s sovereign credit rating to BBB from BBB+. Among the reasons provided for this downgrade were the violent strikes and increased social tensions that affected growth and the current account.
This follows sovereign downgrades last year by Moody’s Investors Service and Standard & Poors. Moody's Investors Service downgraded South Africa's government bond rating by one notch to ‘Baa1’ from ‘A3’ last year. Among their reasons, Moody’s listed relatively high labour costs despite high unemployment.
High level of labour unrest is causing concerns among investors
Added to this concern in terms of credit ratings is the high level of labour unrest in the country, which has kicked off with a bang in the De Doorns area.
This strike action is a clear illustration of the state of the labour environment.
The strike in De Doorns, which is against procedure, may have severe ramifications for the industry and the economy of the area as a whole.
Besides the criminal nature of the behaviour, the ramifications will inevitably include job losses, loss of production and potentially the closure of certain businesses.
This has often been something that appears to have been overlooked, alternatively ignored, by these striking workers: If there is no longer a company because of your actions, or it suffers losses because of your actions, there will be either no employment or large-scale retrenchments.
Last year’s mining strikes also badly affected investor confidence
The strike in De Doorns follows hot on the heels of the infamous strikes in the mining sector last year, which left over 50 people dead, starting with the violence in August at Marikana. It is reported that the strikes drew in over 140 000 workers and cost more than US$1.2 billion (approximately R10 billion).
Added to this are the following statistics:
Clearly Cosatu is delivering on its promise of rolling mass action.
The mining industry is the clearest indicator of the direct impact of the current environment. We have the most valuable mineral wealth in the world, estimated at c.US$2.5 trillion (approximately R21 trillion) and yet, we are ranked 56 out of 93 in the 2012 Fraser Institute Mining Survey because of an investor unfriendly political environment.
The Wall Street Journal has also recently published an article painting a bleak picture of South Africa's economy, saying labour unrest has caused its economic growth to fall behind other African states: “The unrest is exposing a stark reality - South Africa is falling behind, even in Africa.” The article said Rwanda, which had 800 000 people killed in the same year the ANC took power, had managed to achieve annual economic growth of near 8% since 2004, more than double South Africa's 3.7% growth rate during the same period.
So what has the labour unrest actually cost SA?
Continuing strike action and labour unrest that has occurred throughout South Africa over the last few months has had a serious impact on the confidence of the country’s graduate professional market, according to the recent PPS Graduate Professionals Confidence Index.
By late November last year, National Treasury estimated that the impact at the platinum and gold mines has cost the economy more than R10 billion in 2012.
Also in the Motor Industry, Ford Motor Company of Southern Africa president and chief executive Jeff Nemeth said that unstable input costs, labour forces and industrial policies in South Africa might make it harder for domestic motor manufacturers to obtain approval from their parent firms for large new investments in the country.
Clearly, this amount of concern and negativity around the industrial relations environment will see more focus on trying to smooth over relationships and focus on raising our levels of productivity to ensure a sustainable labour market and inevitably, economy. It is our view that the protests are ill timed for the sustainability of the country’s economy and will do little to appease an already smouldering cauldron.
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Author: Jonathan is the CEO of Global Business Solutions and is a nationally acclaimed consultant, lecturer, attorney and author on matters relating to Labour Law, Industrial Relations and Broad-Based Black Economic Empowerment. Jonathan is also an Arbitration and Mediation panelist, accredited Commissioner of the Commission for Conciliation, Mediation and Arbitration, member of Tokiso dispute settlement panel. |
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Author: Grant Wilkinson is an admitted Attorney in the field of commercial law with specialisation in labour law and a senior Industrial Relations consultant. Grant has wide ranging experience in both consulting and training on subject matter covering all aspects of Labour Law and various aspects of Industrial Relations, Legislative Development, Commercial Law, CPA, Corporate Governance and Human Resources. |
