Workers strike for above-inflation wage increases

This is the season of wage bargaining, which traditionally begins in early May and ideally results in settlements by about July. So this is strike season. It may be too early to tell whether this season is unprecedented. We forget, perhaps, that last year also saw some big strikes in platinum and the public sector. Labour department statistics show that even though the number of strikes declined last year, man-hours lost to strikes rose 40%, a level not seen since 2001.

What is perhaps most significant is that these are strikes of the good times. They are not the product of deep deprivation. These are workers who have more to lose than they did a decade or two ago — which is why it is unlikely any union could keep them on strike for long. But it also means that the way workers measure what they ought to be getting, and stand to gain, has changed.

No wonder, then, that union wage negotiators make a habit of querying the official inflation rate, which has fallen to 3,5%, as a basis for wage increases, arguing that the rate workers experience is much higher. That may be the obvious tactic. But what this wage round suggests is that though SA’s inflation-targeting policy has gained credibility, employers and employees still have higher ranges in mind for pay.

  • The gold mines have settled at 6%-7% — the sector’s first single-digit raise.

  • Metal and engineering came in at 5,2%-6,8%,

  • Pick ’n Pay at 7,2%.

  • Even municipalities are offering 6%-plus.

    So increases, especially in strike-torn industries, are coming in at or above the top of SA’s inflation target range.

    The Bureau for Economic Research’s most recent inflation expectations survey shows

  • Inflation was expected to average 4,5% this year and 4,9% next year,

  • However business people and union officials surveyed expected wage increases to average 7,2% this year,

    That unions expected higher increases, partly explains the strikes. But the market could also take comfort from the resulting increases are not far off what companies were expecting.

    Source: Hillary Joffe Wave of Strikes Come Just As Good times Get Rolling For South Africa Business Day 16 August 2005

    For Text:

    FMF Policy Bulletin/ 23 August 2005
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