Strikes in South Africa could have long-term economic consequences

South Africa’s civil servants continue to flex their muscles, rejecting the latest government offer of wage increases in a nationwide strike that has reached its 16th day.

Because the striking workers are teachers, nurses, and other bureaucrats – and not, say, autoworkers – the economic impact of this strike has been much less than the social impact of students unable to learn, patients unable to receive healthcare, and a government unable to properly function. Still, South Africa’s business reputation might suffer down the line.

“Long-term, what this does affect is the perception of foreign investors, particularly after the fantastic experience of the 2010 World Cup,” says Andrew Levy, a labor relations specialist at Andrew Levy Employment in Johannesburg. “People who are here can see this for what it is, but for people who were thinking of coming here, or going somewhere else, they might think, ‘Maybe we’ll do better in Poland or Croatia.’ ”

Economic woes for Jacob Zuma

For the presidency of Jacob Zuma – who ordered his ministers back to the negotiation table this week – the rejection by the two largest unions in the strike, that of nurses and of teachers, is a crushing political blow. After all, it was union members belonging to the massive Congress of South African Trade Unions (COSATU) who formed the bulwark of President Zuma’s campaign support, paving the way for his ascendance to power in 2007. The honeymoon ended quick after that, and it has become clear that COSATU is no longer content to push simply for wages and benefits. Now, it seems, they want a greater share of political power.

“This is a political move by COSATU to flex its muscle within the alliance in government,” says Dennis Dykes, chief economist at Nedbank in Johannesburg. “The government wages bill has risen 17 percent since 2007, and they do realize that their people are not well paid. But in the global environment, you don’t want to draw attention for increases in government spending. You want to bring fiscal discipline.”

At first glance, the distance between the government’s offer (7.5 percent wage increases across the board, plus $110 monthly housing allowance) and the union’s demands (8.6 percent wage increase, plus $138 monthly housing allowance) doesn’t seem all that great. A second look shows that even the government’s offer will require increased debt and spending cuts elsewhere.

"Put simply, government will be borrowing money to pay wages and debt service costs. This is not only unsustainable but will require future generations to pay for our current spending," the government's spokesman Themba Maseko said on Sunday.

Strikers steadfast

But union members say they will make the country ungovernable until their demands are met.

Today in Johannesburg, more than 5,000 government workers took to the streets, threatening to bring the economy to a halt unless the government meets their demands by Sunday.

Today's march through the Johannesburg central business district was spearheaded by Joe Mpisi, provincial chairman of the National Education, Health, and Allied Workers Union (Nehawu). He later handed over memorandums to departments of justice, housing, and finance.

"We have outrightly rejected the government's ... monthly housing allowance and 7.5 percent wage increase,” Mr. Mpisi said while addressing thousands of government workers. "This renewed strike will ensure that the country's biggest hospitals, Baragwanath, Hellen Joseph, Natalspruit, and Charlotte Maxeke hospitals are completely shut down. More bodies will pile up."

A warning to the government

The participants also marched to the department of finance, where they demanded that it should make funds available for the workers. They argued it was the department of finance that had financed huge projects and pointed out accusations that the department had gone on a spending spree on ministers during the 2010 FIFA World Cup, which South Africa hosted.

Ronald Nyathi, the provincial secretary for South African Democratic Teachers Union, warned the government that they would intensify the strike until their grievances were heard. "The government has money, but does not want to give it to the workers,” said Mr. Nyathi. “We will not return to the classrooms until our demands are met."

But one striking woman, Hlengiwe Mokgoshi, who works for the department of roads, says she sympathized with innocent children, women, and other elderly people suffering from lack of attention.

"The strike is justified, but we are worried that it is seriously impacting on children at various hospitals nationwide," says Ms. Mokgoshi.

The government has already increased its original offer of a 7 percent wage raise and 700 rand ($97) housing allowance. The move raised hopes the strike would end, but the workers have dismissed the offer, calling it an insult.