Business
South Africa: Labor unrest in mining industry to negatively impact economy – Finance Minister
Renewed labor unrest in Africa’s biggest economy will raise a red flag for ratings agencies.
“The platinum industry needs to seriously get around the table,” Gordhan told state broadcaster SAFM in an interview on Monday. “We can least afford another round of strikes that will act as a destabilization to the platinum sector, which has had increasing difficulties over the last 18 months.”
Earlier this month, Moody’s cited weakening productivity and strike-related business losses, exacerbated by declining terms of trade, as a major credit challenge for South Africa.
“The economy has never fully recovered its momentum following the global recession in 2009, partly due to domestic political and economic turbulence ignited by labor unrest and the associated uncertainty that it has created,” it said.
Demands for wage increases well above inflation of 5.3 percent will also worry the Reserve Bank, which has been blocked from further policy loosening by price pressures stemming from the rand’s weakness.
The central bank will likely keep interest rates at a 4-decade low of 5 percent at its first policy meeting of the year next week.
At Anglo American Platinum and Lonmin, the AMCU is seeking a minimum monthly wage of 12,500 rand (US$1,200) for entry-level workers – more than double current levels, under the banner of a “living wage”.
