The biggest union at Transnet has hinted it will accept a 6% offer recommended by the Commission for Conciliation, Mediation & Arbitration (CCMA) to end a week-long strike that has crippled rail and ports, costing the economy up to R8bn a day.
Vital medical supplies are also being held up in the ports, creating bottlenecks that pose a serious risk to patients. Business organisations are warning of shortages of petrol and basic goods should the strike persist, while Eskom says it could affect diesel storage.
In a Q&A with the Sunday Times, Nkoketse Sepogwane — first deputy president of the South African Transport & Allied Workers Union (Satawu) — said union leaders would urge members to accept the recommendation from the CCMA.
“We’re trying to get them to understand the impact on the economy and that we might lose public sympathy if we reject this. We’re going to our structures for a mandate but will explain to them that if we reject an offer that is just 1.5% short of inflation we might lose public sympathy,” Sepogwane said.
The workers are demanding 12%-13%.
The CCMA recommended a three-year agreement in which Transnet should raise its wage offer for all permanent bargaining unit members to 6% this financial year. this would be followed by increases of 5.5% and 6% increase in the next two years.
The Labour Relations Act grants the CCMA power to advise workers, employers and trade unions on preventing and resolving wage and other labour disputes
Transnet spokesperson Ayanda Shezi said the state-owned company would not comment publicly on the offer. “We are not in a position currently to indicate. We are allowing talks between the parties to continue,” she said.
We’re trying to get them to understand the impact on the economy and that we might lose public sympathy if we reject this
— Nkoketse Sepogwane, first deputy president of Satawu
In its latest financials, Transnet reported group revenue of R68.5bn, of which R46bn went on labour costs for its 50,000 employees. Should it settle at 6% for all bargaining unit members — about 80% of the workforce — Transnet could see its wage bill increase by R2bn.
Speaking at the Agri SA annual congress on Thursday, Transnet Group CEO Portia Derby said a 66% wage bill was not sustainable, and the company could not afford higher salary increases.
Transnet has offered a 4.5% increase for this year, backdated to October 1, with raises of 5.3% for each of the next two years.
The strike has all but paralysed harbour operations, crippling industries such as mining and agriculture that rely heavily on exports and foreign earnings.
Bottlenecks at the major ports are now so bad — more than 30 ships were anchored off Durban at the end of the week — that large container ships are bypassing South Africa to offload elsewhere. This means some goods will have to be trucked in from Luanda in Angola and Pointe Noire in the Republic of Congo.
“Important medical raw materials and finished products are being held up,” said Stavros Nicolaou, chair of the pharmaceutical task group that helps regulate the medical supply chain.
“For the moment, buffer stocks are sustaining supplies, however the industry remains concerned that the protracted strike will pose a serious health risk to patients, particularly those requiring critical care and chronic medicines,” Nicolaou told Business Times.
Freight forwarders warn the time needed to clear the mounting backlog at the ports is already pushing the economy to breaking point — and the strike is yet to end.
As of Friday, 12 ships had bypassed South Africa, some carrying supplies and others that should have picked up exports stranded in the country. About 800 refrigerated containers, called “reefers”, were stacked up in Cape Town due to the delays and an estimated 40,000 palettes of citrus fruit awaiting export were stuck in cold storage.
Jannie Venter, vice-chair of the Western Cape Exporters Club, said: “If we don’t come to some sort of agreement or consensus soon, the damage will become irreparable. Our already fragile economy cannot handle this.”
Eskom has warned it may soon run out of diesel needed to power its gas turbines, and the head of the Airlines Association said a shortage of jet fuel would be disastrous.
“Another week of delays, and you will start to see the wide selection of groceries at your local Woolworths, Pick n Pay or Checkers start to diminish rapidly,” said Jacob van Rensburg, research head of the South African Association of Freight Forwarders.
“Another week further, and motorists will have a problem at the pumps.”
Eskom spokesperson Sikonathi Mantshantsha said the supply of diesel would be affected if the strike continued. “Eskom has a total capacity of just over 2,600MW of open cycle gas turbine capacity,” he said. For the time being diesel stocks were sufficient, but “this would obviously be compromised should the strike drag on and disrupt its imports”.
The South African Petroleum Industry Association warned of possible fuel supply disruptions “from the pipeline and rail divisions” and is monitoring developments.
There had not yet been disruptions, said spokesperson Avhapfani Tshifularo.
Congestion at Durban port prompted the Durban Chamber of Commerce to present Transnet with a bulk evacuation plan. It is still unclear whether this will go ahead.
On Friday, striking workers in a motorcade of 100 vehicles gathered outside one of the entrances to the port on the Victoria Embankment, causing traffic chaos.
Cape Chamber of Commerce CEO John Lawson said the country risked losing critical manufacturing capacity due to the bottlenecks. “The businesses hurt the most are those importing critical components and who are dependent upon them. It is the final straw that breaks the camel’s back for many small businesses — because they can’t deliver and meet deadlines.”
One hard-hit sector is boatbuilding, where some yards are unable to complete export orders on time due to incoming stock delays.
Clearing agent Craig Garrow from Pronto Clearing described the strike as “a disaster”.
“One boatbuilder called me on the first day of the strike, asking is it worth spending R500,000 on airfreight to fly in some parts as their sea freight container, although almost within touching distance, would be bypassing. I said ‘Yes, do it,’ as this could go on for weeks,” Garrow said.
Aaron Munetsi, CEO of the Airlines Association of Southern Africa, warned of possible jet fuel disruptions. Speaking at the association’s annual assembly in Kleinmond, he said: “If the strike is prolonged, aviation will not be spared as it will jeopardise fuel supplies to our main airports at a time when airlines and our industry partners can least afford further disruption.”
A top economist cautioned that higher wage settlement could pose a threat to the sustainability of Transnet with severe repercussions for the economy.
Professor Raymond Parsons of the University of the North West’s Business School said highly inflated wage bills and prolonged industrial action would place jobs at risk and harm South Africa’s stature as a supplier of goods.
“In Transnet's case, it is not viable to have two-thirds of its operating costs embedded in its wage bill. A highly inflated corporate wage bill inevitably puts jobs at risk in an economy that we already know has among the highest unemployment levels globally.
“We must therefore avoid pushing industrial action to the point at which it becomes inimical to the job-rich growth South Africa so greatly needs. There is also the question of the longer-term reputational damage to South Africa as a reliable supplier to global markets if Transnet is paralysed for a prolonged period,” he said.
Miyelani Mkhabela, chief economist at Antswisa Transaction Advisory, said the unions would eventually get what they want. “The trade unions will win the current strike, as their propositions are aligned with inflation-based remuneration increases.”
He said employers should offer workers inflation-linked increases annually without having to wait for strikes.
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