Finance Minister, Pravin Gordhan, has issued a firm warning, particularly to the mining sector, that the labour instability currently looming within the country will damage the economy and deter investors.
Gordhan – who is the first among the cabinet to directly address the matter – has urged businesses, organised labour, civil leaders and the government itself not to underestimate the strikes in the mining sector, referring to the situation as one that needs no complacency.
“If we do not resolve our labour relation challenges, we will all be losers, we will see deteriorating confidences, job losses and business failures,” stated Gordhan. “The present uncertainty in the labour relations environment in mining and other sectors requires concerted action by organised labour, business, civil leaders and the government. There is no room for complacency here; we are in this together,” he motivated.
The issue was given attention yesterday during a public committee hearing; and while the finance minister was set on explaining the damage inflicted onto the economy thus far, many opposition parties focused on political issues which needed to be tackled immediately. These included ending the punitive wage demands which subsequently lead to investment repulsions and pressure on the rand, which has dropped by 24c this week.
Adding weight to the voice of the opposition parties was Brian Kantor, investment strategist for Investec, who urged the government to reduce the power of unions, reminding the government that union power “can be taken away.”. Suggesting companies should put an end to collecting subscriptions on behalf of unions and assuringly stating that the move “would undercut the power of unions in one fell swoop”.
Both the rand and the share prices of mines have taken a hit as a result of the misbehaviour of unions. Economists and analysts are discussing ways to revive the currency and shares, and while share prices are expected to gradually recover, the rand – which has a tendency to rise and fall rapidly – is not expected to see a repo rate cut for the remainder of the week.
Unions are not contributing to the economy’s recovery either. The recent demand of a 60 percent wage increase by coal and gold miners represented by the National Union of Mineworkers (NUM) has undermined the interests of companies and their respective investors.
ID MP Lance Greyling has called for intense government action to be taken in order to regain investors, “We need to resolve the labour relations issue in particular in the mining sector. We need to create certainty around South Africa as an investment destination.”
The nation’s economy is vulnerable to massive damage and is at the mercy of both the government and unions.