Friday, 20 August 2010

Strike dashes World Cup hopes

THE strikes in the public service and automotive sectors would deter foreign direct investment in SA, a significant contrast to the global optimism about the country during and straight after the Soccer World Cup, economists said yesterday।

“The timing of the strike is problematic, considering the World Cup created such a good impression to potential investors। These hopes would be surely dashed,” said Stanlib economist Kevin Lings.

He said SA could not afford to have nationwide strikes on this scale, especially as the recovery taking place after the global recession was still fragile ।

“The bottom line is that the strikes come at a critical phase of recovery from recession। Most countries are looking at their own economic recovery so that they can gain momentum as soon as possible, Mr Lings said.

Public service unions are demanding an 8,6% wage increase, a R700 housing allowance and an equalisation of medical subsidies.
Yesterday, the South African Democratic Teachers Union (Sadtu) and the National Education Health and Allied Workers Union — together representing nearly 500000 workers — rejected the government’s revised wage offer।

Public schools, hospitals and other government administration offices are expected to close today because of an indefinite strike by public service workers।

“The disruption of services, particularly schools, comes at the wrong time, especially when the country is trying to lift up its matric pass rate,” said Mr Lings। He noted that wages could not be separated from service delivery.

Sadtu said: “The current macroeconomic policy, which is a political matter, is responsible for low wages in the public services।”

Public Service and Administration D eputy M inister Roy Padayachie said the government remained committed to finding a solution to the public service wage dispute।

“We are in the midst of trying to finalise the negotiations in the public sector dispute,” Mr Padayachie said। “We cannot allow ourselves to be compromised from meeting the obligations that we as a government have committed in our programme of action … the issues of finding an appropriate solution and ensuring that the strike is averted are very central to our commitment,” he said.

Meanwhile, the car strike entered its fifth day yesterday, with workers and employers reaching a deadlock over wage negotiations।

Both the National Union of Metalworkers of SA (Numsa) and the Automotive Manufacturers Employers Organisation (Ameo) kept mum over yesterday’s wage negotiation outcome, saying it was at a “sensitive stage”।

George Glynos, an economist at ETM, said the labour dispute might indicate to foreign investors that SA’s automotive industry did not offer the level of productivity required to justify investment capital।

“When there are significant labour problems, companies prefer to spend money on capital equipment to improve efficiencies। Of course, this is not ideal, but is often the necessary course of action.”

Mr Glynos said that investors were well aware that SA had a powerful labour movement, and this had not stopped investment from entering the country।

“Obviously the unions’ power is a deterrent, but investors realise that SA has massive potential and untapped labour reserves which can and have been used to their advantage,” he said.
However, Mr Glynos noted that the public sector and automotive industry strikes were putting pressure on an economy that was bogged down by rising energy costs and eroding infrastructure।

chilwanel@bdfm.co.za shirleyb@bdfm.co.za

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