South Africa public sector unions representing more than a million workers staged a one-day strike, threatening an extended labour stoppage this week that could cripple commerce in Africa’s largest economy.
Today’s action increases pressure on President Jacob Zuma’s government to reach a deal by a Thursday deadline set by the unions to prevent a repeat of a prolonged public sector strike three years ago that dented the economy and damaged support for Zuma’s predecessor, Reuters reports.
Marches were held in Cape Town and Pretoria, South Africa’s administrative capital, as part of a “total shut-down of the public service”, according to the country’s largest umbrella labour organisation COSATU.
Everything from schools to public offices to immigration centres was affected, although essential services such as police and hospitals were running on reduced staffing. Unions and government negotiators planned talks later in the day, after the protest marches were over, union officials said.
“In a strike of this magnitude it is difficult to make sufficient contingency plans to ensure business runs as usual but we have employed contract workers to make sure government departments will not be closed,” said Dumisani Nkwamba a spokesman for the public service ministry.
Unions want an 8.6 percent pay hike, twice the current rate of inflation, and a 1,000 rand monthly housing allowance. “Failure to meet these demands by 12 August 2010 will result in indefinite labour action by all unions until the demands are met,” COSATU-affiliated unions said in a statement.
The government is offering 7 percent and 630 rand for housing, although analysts believe it is likely to raise its offer rather than risk a walk-out that would damage the economy.
Analysts expect the ruling African National Congress, which has a longstanding alliance with organised labour, to give in to the unions’ demands. But such a deal will make it hard to bring the deficit down from 6.7 percent of GDP without spending cutbacks elsewhere. The government, which budgeted for wage increases based on a 5.2 percent inflation projection, has not said how much more it would spend under its offer or the deal sought by the unions.
In an indication of how costly the deal could be, just the 1,000 rand monthly housing allowance sought by the unions could account for more than one percent of the state budget.
The government said its offer package would amount to an average 9 percent increase for 1.3 million unionised public servants. A mid-grade public sector employee makes on average 8,800 rand a month in salary and benefits, above the national average of 6,383 rand, according to government figures.
The central bank has also expressed concern about elevated pay increases stoking inflation in the wider economy, putting upward pressure on interest rates.