South Africa's truckers threaten 'devastating' strike

Inflation could spike from repeated wage hikes, economist warn, although ignoring union demands threatens to create instability in South Africa.

Last year at this time, South African transport workers unions nearly brought the continent's largest economy to a halt, refusing to offload ships and airplanes until their wage demands were met. The timing couldn’t have been better, at least from a union organizer’s perspective, with the strike called just months before the World Cup.

Then, the union's demands were largely met, but now the South African Transport and Allied Workers Union (SATAWU) is at it again, demanding a 20 percent wage increase over the next two years from the trucking industry’s Road Freight Association.

South Africa's workers unions have enjoyed rising clout in recent years, serving as a crucial member of the ruling alliance alongside the African National Congress and the South African Communist Party. Yet economists have warned that repeated wage hikes risk exacerbating inflation and pushing up the cost of basic goods.

At the same time, ignoring union demands here threatens to create instability in a country that remains one of the safest bases for business in sub-Saharan Africa.

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“One hundred percent of goods are carried by trucks at some stage, either at the end of the line or in some cases all along the line,” says Frank Beeton, an analyst at Econometrix, the Johannesburg based economic-analysis firm. “This could be crippling for South Africa, but it is impossible to predict until we get a sense of whether this strike goes forward and how widely it is spread.”

Since union negotiations began Dec. 15, the trucking industry has offered a wage increase of 7.5 percent this year and 7.5 percent next year, which it notes is well over the current inflation rate. But SATAWU says this is far too little for the 70,000 truck drivers in its membership who are already poorly paid.

Trumpeting the truck drivers' importance to the economy, June Dube, first deputy president of SATAWU, told Reuters last month that "a strike would have a devastating effect because transport is a strategic industry."

South Africa is, of course, a country with many goals that seem at cross-purposes. On one hand, it aspires to be the Gateway to Africa, and thus has tried to attract foreign investment with its liberal business environment and stable labor market. On the other hand, it is a country where up to 40 percent of the population is unemployed and with one of the greatest disparities between the rich and poor.

South Africa’s ruling party, the left-leaning African National Congress, has attempted to balance those two goals for some 16 years now, with varying success. But the patience of South African unions that support the ruling coalition is running thin.

The umbrella labor organization Congress of South African Trades Unions (COSATU) has enjoyed ever-greater influence since supporting the candidacy of Jacob Zuma in the 2008 election. But recently, COSATU has hinted at dissatisfaction with President Zuma’s job performance, such as when it lambasted the government's recently released National Growth Plan (NGP) and charged that it had a pro-business bias.

"The NGP takes it as a law of nature that, for example, there is a trade off between wages and employment, between current consumption and future growth," COSATU said in a statement.

At present, negotiations between SATAWU, the transport union that is part of COSATU, and the trucking industry continue. Calls to SATAWU spokesman Zenzo Mahlangu were not returned, and his voicemail box is full.