South Africa's transport sector strike has entered its second week following failed negotiations between the striking Transnet workers unions-the South African Transport and Workers Union (Satawu) and the United Transport and Allied Trade Union (Utatu)-and management. According to the Business Day, it is unclear whether Transnet improved its previous offer of an 11% basic wage increase during mediation proceedings over the weekend or whether Satawu and Utatu relented on their demand for a 15% across-the-board wage increase. Employees from the Passenger Rail Agency of South Africa (Prasa) are to join the strike from today (17 May) and Prasa will suspend rail operations indefinitely, leaving commuters, who use the trains of its subsidiaries, Metrorail and Shosholoza Meyl, stranded. According to the South African Press Agency, the same unions have been in a wage negotiations dispute with Prasa and were demanding a 16% increase across the board, while Prasa had offered 8%.
Significance: The state-owned transport utility, Transnet, is responsible for moving freight by rail, while Metrorail takes responsibility for passenger services. According to the Business Report, Transnet employs close to 50,000 people, of which 18,000 are represented by Satawu and 22,000 by Utatu. The Satawu industrial action began on 10 May 2010 and Utatu joined on 12 May. To quantify the impact of this strike on the transport industry at this stage is difficult, but anecdotal evidence points to disruptions at mines and ports, which is sure to impact heavily on exports. The Business Report shows that both Kumba Iron Ore and Merafe Resources, the Xstrata-Merafe chrome joint venture, declared force majeure (a standard clause in supply contracts, which exempts the contracting parties from fulfilling their contractual obligations due to causes beyond their control) last week as a result of the strike. Prolonged strike action in this sector will negatively impact South Africa's trade flows, thus disrupting the economic recovery, while double-digit wage demands without the accompanying productivity increases will exacerbate the unemployment situation in South Africa and add to inflationary pressures.
