General strike threatens economy

A decision by South Africa’s biggest labour federation, the Congress of South African Trade Unions (COSATU) to stage a one-day general strike in support of demands to amend labour legislation to force employers to negotiate retrenchments, has been criticised by economists and businessmen as ill-timed and costly to an economy struggling to come out of the doldrums. COSATU has announced that its 1.8 million members will embark on a 24-hour general strike on Wednesday, the second such action since democratic elections in 1994 ended apartheid rule. The strike, according to COSATU’s spokesman, Siphiwe Mgcina, will involve workers from all sectors of the economy. COSATU’s demands also include the call to the government of President Thabo Mbeki to slow down the pace of tariff cuts, to prevent job losses in state-owned enterprises during privatisation and to amend the provisions of the Insolvency Act that give creditors precedence over workers wages during liquidations. Kevin Wakeford of the South African Chamber of Business (SACOB) said in a statement the strike would cost the economy US $462 million in production and take as much as half a percent off this year’s projected growth rate of 3.5 percent. “The strike will reinforce the negative stereotype of the region,” SACOB said, adding: “The timing couldn’t have been worse. We desperately need foreign investment.” An investment economist, who did not want to be named, told IRIN that the apparent conflict of interests between COSATU and its ally, the ruling African National Congress (ANC), could lead to investor unease about South Africa. “Investor sentiment has been damaged and is very fragile. The COSATU strike will not help at all,” the economist said. He added that investors want political stability. “COSATU is still an alliance partner of the government and there appears to be political turmoil in the alliance.” Mgcina dismissed suggestions that the strike will lead to a withdrawal of investment. “The employers are only worried about their profit margins. There has been a 16-year strike by employers to invest in the economy,” he told IRIN. Mgcina said the South African economy has shed more than one million jobs since 1984. He said that about 350,000 new entrants enter the job market every year, with very few employment opportunities. “South Africa needs a process that can bring together all major stakeholders to find ways to restructure the economy to end the jobs crisis,” he added. COSATU’s strike call comes at a time when the rand, South Africa’s currency, the bond and stock markets have taken a beating from negative sentiment by foreign investors caused largely by neighbouring Zimbabwe’s political turmoil. The rand last week dropped to a 20-month low of R7 against the US dollar.