July 12, 2018

Strikes: Win-win, win-lose or lose-lose?


Strike season seems to be an annual occurrence in South Africa. But how does it impact our economy, employers, and the striking employees themselves? After strikes, there seems to no real post-strike economic evaluation conducted by government, unions, employers, or strikers themselves to avoid the barrage of strikes that cripple our economy.

Employers never seem to be prepared for demands presented by unions or employees, and it is apparent that they are just not able to accommodate double-digit wage demands.

A great example is the current ongoing Eskom strike. Eskom is proposing a 6.2% wage increase from the zero percent they originally offered to the Labour Unions, who are demanding a 15% wage hike.  What would be the impact of a three-year scaled increase of a 9%, 8.6% and 8.5% wage increase on Eskom when they have stated their loses as being R50-billion and more in damages in these few days of the strike versus the unions’ proposed wage cost of R1.2 billion? This would translate to a R1.2 billion plus increase coupled with the cumulative billions in the full wage bill carried by Eskom.  Currently, the battle for higher wages continues with Eskom’s new offer of 7% being rejected by the employees.

In many instances an increased wage bill for the employer leads to negative impact for the employees whereby the employer mitigates its high wage bill with retrenchments, leading to high unemployment.

South Africa has come from a booming economy in the last quarter of 1994, where growth was 7.6%, to 2.2% growth currently. There have been some wobbles in between with a record low of -6.1% in the first quarter of 2009, which had its origins in the 2008 Eskom electricity crisis and the global financial crisis, and a massive COSATU strike.

Our fuel prices are also impacted by wage negotiations annually with the demands of the forecourt labour force, which also has a negative impact on our fuel prices.  A wholistic long-term strategy needs to be formulated for the retail fuel industry to avoid exorbitant fuel price increases in the future when crude oil and the exchange rate rally against each other.

Research shows that it takes about a month to two, if not three months, for the impacted sectors to recover after a strike, and some never recover fully.

In 2015 South Africa observed a total of 110 strike incidence and in 2016, 122 strike incidences leading to a recorded 58.8 working days lost per 1 000 employees in 2016.

It would be in the best interest of the country and the economy to mitigate the impact of future strikes by resolving labour laws that aim to combat the negative impacts of collective bargaining and by finding a solution that works for all parties.

 Ruth Crisp
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