Numsa steel workers strike is bad news for SA’s economic recovery

The steel strike bodes ill for economic recovery in South Africa as a whole and not only for the steel and manufacturing industry.

There is also a concent that the indefinite labour action will drag on as it did in 2014, when the strike lasted four weeks and wiped R6 billion from the country’s gross domestic product.

According to Oxford Economics, the memorandum of the National Union of Metalworkers of South Africa (Numsa) handed over at the march to the Metal and Engineering Industry Bargaining Council on Tuesday was riddled with fighting language, saying the union was “declaring war” and accusing employers of “refusing to make a meaningful offer that can resolve this round of negotiations”.

Numsa is demanding an 8% across-the-board increase in the first of a three-year agreement that will see CPI + 2% increases in subsequent years. The Steel and Engineering Industry Federation of South Africa (Seifsa) is offering a 4.4% increase this year, followed by CPI + 0.5% and CPI + 1% in years two and three.

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The ghost of the 2014 steel industry strike

Responding to Numsa’s demands, Lucio Trentini , CEO of Seifsa, invoked the ghosts of 2014, the last time steel workers downed tools.

“We don’t want the strike to last four weeks, hence the urgency to get back to the negotiating table,” he said and fired a broadside of his own, saying that “jobs are scarce in this industry” and warning that a prolonged strike would lead to further job losses.

Trentini said that the sector has lost almost 25 000 jobs since the start of the pandemi,c and claimed that an 8% wage hike would “put many, many employers out of existence”. Seifsa represents 18 employer associations with a combined workforce of about 170,000, about 57% of workers in the industry.

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Finding agreement will not be easy

Oxford Economics says finding agreement will not be easy.

Numsa and Seifsa are also not the only players involved in the dispute, as four other unions, with a combined workforce exceeding 100 000, are backing Numsa’s industrial action. Seifsa is joined by the National Employers’ Association of South Africa, SA Engineers and Founders Association, and Consolidated Employers’ Organisation.

Trentini pointed out that the 2014 strike “dragged out for four weeks and was one of the most violent and acrimonious that has visited the sector”, costing the industry R300m per day.

Asked during a television interview about a scheduled meeting at the bargaining council on Wednesday, he said he was unaware of it, illustrating that there was much to be done to simply get all interested parties back around the negotiating table, Oxford Economics said.

Yesterday’s demonstrations were vitriolic but peaceful, but the potential for escalation exists as both parties dig in their heels.”