It's not secret that South African labour unions love a good "toi toi". However the increase in strikes, particularly illegal (often violent) wildcat strikes are causing massive long term damage to the South African economy and it's reputation as a safe and stable place to conduct business. Just over R10bn was lost in gold and platinum production during the mining sector stoppages in the 2012/2013 financial year. An additional R180m was lost in coal production during the same period. The total value of production lost across all sectors of mining amounted to R15.3bn. This is according to calculations by the National Treasury on the cost to the South African economy due to the mining sector stoppages.
The Treasury estimates that the mining stoppages subtracted 50 basis points from gross domestic product (GDP) growth in 2012 so that GDP growth was 2.5% instead of 3%. The Treasury reported a decrease of 16.7% in mining output between July and October 2012. The losses in the mining sector damaged other sectors of the economy. The sectors most affected were fabricated metal products, machinery and equipment, rubber, and basic iron and steel.
Export revenues were also projected to be about R12bn lower in 2012 than they would have been without the disruptions. The Treasury noted that because of the strong linkages that mining had with other sectors, the export losses exceeded the direct losses.
A further consequence of the mining strikes and general labour unrest, among other things, was the downgrading of the Government’s credit rating and of the viability ratings of major banks by international ratings agencies Moody’s, Standard and Poor’s, and Fitch in the latter half of 2012 and beginning of 2013.
Government, unions and employers (read as mostly irresponsible unions) need to work harder to ensure that labour negotiations are conducted in a reasonable manner so that economically strikes do not occur.
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