The ongoing platinum strike in South Africa’s mining sector is harming South Africa’s economic growth rate and negating efforts to narrow the current-account deficit, according to Lungisa Fuzile, the director-general of the National Treasury.
In an interview with Bloomberg News, Fuzile said the work stoppage is particularly concerning, especially when “that occurs at a time when the current-account deficit is hovering at around 5 percent of gross domestic product. Striking is part of the labor relations processes, but when the strikes get protracted or somewhat violent, then those developments are cause for concern.”
The strike by more than 70 000 workers at South Africa’s top platinum mining houses – Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin – has been ongoing since 23 January 2014. The four-month long strike has brought most output to a grinding halt, resulting in a 4.7 percent decline in mining production in the first three months of 2014.
“We are always concerned about growth. “The signs for the first quarter are not pointing towards a very strong kind of rebound,” Fuzile said, adding that growth may slow to an annualized 2.3 percent in the first quarter from 3.8 percent in the prior three months considering that mining accounts for about two-thirds of exports from South Africa.
“Protracted strikes, especially in a sector like mining, which is very important in terms of backward and forward linkages to other sectors, like manufacturing, like the chemical sector, is a cause for concern,” Fuzile said. “Disruptions in production, even sometimes for short periods of time, are not necessarily good for growth.”
To date, the strike has cost employees R8.6 billion in earnings and companies have lost R19.5 billion in revenue.