Uncategorized 4.7.2014 06:00 am

Numsa strike could tip SA into junk status – Moody’s

FILE PICTURE: Striking National Union of Metalworkers of South Africa (Numsa) members. Picture: Alaister Russell

FILE PICTURE: Striking National Union of Metalworkers of South Africa (Numsa) members. Picture: Alaister Russell

Police fired rubber bullets to disperse striking workers at Eskom’s Medupi power station yesterday as Moody’s warned the tooldown could tip the country’s credit rating into junk status.

The warning came as talks got under way to try to end the deadlock that has seen more than 220 000 metal and engineering workers, led by South Africa’s biggest union, the National Union of Metalworkers of SA (Numsa), on strike since Tuesday.

Bloomberg reports Moody’s warned that strikes threaten economic growth and the government’s ability to rein in debt.

“Continued weak investment, exports and overall growth will pose serious challenges to the government’s efforts to rein in its budget deficit and stabilise its debt metrics, a credit negative for the economically troubled country,” said Moody’s.

EU growth

Moody’s has had a negative outlook on South Africa’s Baa1 credit rating since November 2011. That’s two levels above Standard & Poor’s, which downgraded the nation’s debt on June 13 to BBB-, a notch above junk status.

The strikes are making it difficult for South Africa to take advantage of a recovery in growth in its main trading partners, such as Europe, Moody’s said.

“A few hundred workers were blocking one of the entrances to Medupi power plant and we had to use rubber bullets to disperse them,” police spokesperson Ronel Otto told Reuters, adding that the situation had been contained by the afternoon.

Numsa was meeting the main employers’ representative body, the Steel and Engineering Industries Federation of Southern Africa, to try to end the strike that economists say could badly hit Africa’s most advanced economy.

Double-digit increase

The stoppage is costing South Africa some R300 million a day in the wake of a five-month platinum strike that dragged the economy into a quarterly contraction.

Numsa is demanding wage increases of between 12% and 15% – at least double the official inflation rate – from employers represented by Seifsa.

Another employer body, National Employers Association of SA, which is due to meet Numsa today, said its members would not agree to a double-digit wage increase.

“The principle is a double-digit increase. We are dealing with workers who are earning as little as R5 400 a month, nobody can be able to live on that,” Numsa general secretary Irvin Jim said.

US car maker Ford said the labour environment was a concern, but it was managing the effects of the strike.

Scaw Metals, which makes more than R6 billion in annual revenue, said the strike would wipe out about R200 million worth of weekly sales and as much R33 million in weekly profit.

 

 

 

 

 

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