While the weak South African rand could stimulate foreign investment interest and make the country more lucrative for investors, union action may scare off foreign investment, according to Lauren Patlansky, managing director of Grant Thornton’s Asia Business Services.
“There is no doubt that our unions scare off foreign investors,” says Patlansky. “Companies need to take the unions into account when doing financial long-term calculations. For example, they need to take into account what possible strikes could occur and at what cost, over the next ten years.
“The rest of Africa is not unionised and many investors choose to face the many pitfalls in other African countries, including political instability, rather than risk industrial unrest with its financial and reputational costs.”
Currently, the Association of Construction and Mineworkers Union (Amcu) is in its fifth week of wage negotiations with South African platinum giants Anglo American Platinum (Amlats), Impala Platinum (Implats) and Lonmin, with the union demanding a R12 500 basic salary for mineworkers. Ongoing talks with the Commission for Consiliation, Mediation and Arbitration (CCMA) have not yet resolved the stalemate in the sector.
Meanwhile, Amplats is suing the union for almost R600 million in financial damages from the prolonged strike action, saying it needed to employ extra security, damage to property and lost production from deterred nonstriking employees. The strike has now cost the companies over R5.4 billion, with employee wage losses exceeding R2.4 billion.