As we all by now know, the recent platinum mining strike in North West province, followed by the metal and engineering sector strike, severely impacted on the economy. Retrenchments are at the order of the day and the end is not yet in sight.

But how much do strikes cost the economy annually? In 2012 the monetary impact of strikes reported to the Department of Labour amounted to R6 666 103 906 compared to “only” R1 073 109 003 in 2011. The recently released statistics for 2013 does not look much better in any way.

According to data collected and analyzed in 2013 by the Department of Labour there was a rise in the number of strike incidents but a drop in working days lost in 2013 as compared to 2012. About 114 strike cases were identified and recorded by the Department, however it resulted in a drop of about 1 847 006 working days. The number of strikes recorded is more than strikes recorded in the last five years. It represents an increase of 15.1% from 2012 to 2013.

Working days lost through industrial disputes in 2013 were, however, lower than working days lost in 2012. Workdays lost decreased by 44.2% from 3 309 884 in 2012 to 1 847 006 in 2013.

Key features of strike incidents in the 2013 report include the following:

1. South Africa has experienced a rise in strikes incidents from 2009 to 2013 with the exception of 2011 where strikes recorded were lower. In 2009, the Department recorded 51 cases of industrial action, 74 cases in 2010, 67 in 2011, 99 in 2012 and 114 industrial incidents in 2013.
2. Working days lost were at a decrease to 1847 006 in 2013 as compared to 3 309 884 in 2012.
3. Unlike in 2012, protected strikes in 2013 amounted to 48% as compared to the 54% in 2012.
4. The mining industry continued to experience more working days lost (515 971 in 2013) contributing 27.9% of the total days lost. This was followed by the transport and manufacturing industries at 477 355 and 343 222 working days lost respectively
5. In 2013, about R6.7 billion in wages were lost due to the participation of workers in strikes as compared to the R6.6 billion in 2012.
6. In terms of work stoppages recorded provincially, Gauteng, Western Cape and KwaZulu-Natal continued to experience more strikes incidents at 97,66 and 44 respectively
7. The median wage settlement level as reported by Labour Research Services in 2013 was about 8% SATAWU and NUM were mostly affected as a result of high member participation during strike actions in 2013 where both recorded 25.7% and 17.4% respectively
8. Wages, bonus and other compensation disputes remains to be the main reason for work stoppages in 2013 at 76.6% working days lost
9. There were more "strikes in company only" in 2013 with the likes of the South African Post Office, Rumdel Construction, Anglo Platinum Thembelani mines and SAA Technicians.­

The impacts of the strikes have been harsh for South Africa. In the mining industry, union rivalries between Association of Mineworkers and Construction Union (AMCU) and National Union of Mineworkers (NUM) continued to stretch the wage negotiations and also fuel the strikes and stall production. Although mining as a whole makes up about 5% of South Africa's overall GDP, it makes up approximately 50% of the country's total exports. Therefore a drop in production is a drop in the country's export performance.

The strikes in the manufacturing sector, e.g., automotive components sector also affected the South African economy. Manufacturing shrank 6.6% over the second quarter of 2013 due to the lower production of motor vehicles, parts and accessories and other transport equipment. As a result, the German automobile company BMW had confirmed that the strikes in South Africa's automotive sector had killed off its expansion prospects as they considered a location for their new model. The industrial action in the mining, manufacturing and transport industries have all had a bad impact on the economy of the country, while it is battling with high unemployment, in the region of 25%. Experts suggest that 2014 will be no different. These strikes will continue to hurt the South African economy and the investment appeal.

Most strike activities were from the biggest and high economical provinces namely: Gauteng, Western Cape and KwaZulu-Natal. The private sector also recorded a major impact in terms of working days lost as compared to the public sector in 2012.

As in the previous year, Gauteng had the most work stoppages in the country, with 97 work stoppages encountered in the province. This represents a 133% increase from 42 stoppages in 2012. Other provinces with higher work stoppages include Western Cape with 61 work stoppages, an increase of 373% from 15 in 2012. The least number of stoppages were encountered in Northern Cape with just 3 stoppages in 2013, a decrease from last year's with almost 26% stoppages.

With regards to wages lost, a total of R6.7 billion in wages were lost due to work stoppages in 2013. This indicates that an additional R65 million was lost due to work stoppages from 2012 to 2013. North-West contributed the most to the total wages lost, contributing 48.5%, followed by Gauteng with 41.5% in 2013.

One of the factors that have a direct impact on the increase in wages lost in 2013 despite the decrease in number of days and hours lost, is the number of employees involved in work stoppages. The number of employees involved in work stoppages have increased from 241 391 in 2012 to 297 193 in 2013, an increase of 23.1%. The majority of the employees involved (68.9%) in the work stoppages in 2013 were in the mining industry. Other industries that had a noticeable contribution to the total number of employees involved were the community services (7.6%), transport (7.5%) and manufacturing (7.3%) industries.On the other hand, the financial intermediation, electricity and retail trade industries recorded the least members who participated in dispute actions in 2013.

Government has, however, played an active role in attempting to mitigate the damages resulting from strikes. The Minister of Labour had to step in to speed up proceeding in the petrol attendant's strikes, which resulted in a settlement. On the other hand, employers have condemned the unions' attitudes, accusing unions of demanding unreasonable wage increases and resorting to strikes too readily, while unions have pointed out that the employers make huge profits without investing in the workers. Either way, South Africa needs to find a solution for the seemingly failing bargaining structure. Government, unions and business have an important role to play in order to maintain a stable labour force and fair labour practices that will attract investors and inspire economic growth in the long run.

The findings in this report still confirm that the strikes in 2013 were due to disputes over wages, bonuses and other compensation. Unions claim that the companies report increasing outputs while the workers struggle in poverty to uplift themselves. This implies that workers and unions go into negotiations seeking higher wage increases in order to meet the rising living standards, exacerbated either by the tough domestic or international economic conditions. Therefore, unmet demands for higher wage demands in big or small companies result in strikes because workers understand their legislative right to fight for better socio-economic conditions.

By the end of 2013, Government, Organised labour and Organised Business were planning a year-end summit to discuss the ways of minimising the collective damage caused by protracted strikes as they look to stabilise the labour force, advance economic growth and assure investor confidence. It was projected that 2014 would probably be a relatively calm year if these directives were well implemented by all parties in the country. This predication, as we all now know, did not materialize.

Source: The annual industrial action report for 2013, released by the Department of Labour.

Written by Jan du Toit, SA Labour Guide
He can assist employers with IR and HR related services and can be contacted for a consultation at jand@labourguide.co.za.