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Strikes in South Africa could have long-term economic consequences

In South Africa, 1.3 million striking public service workers refuse government offers, further disrupting schools and hospitals and posing long term economic problems.

By Scott Baldauf and Savious KwinikaStaff writer and correspondent / September 2, 2010

State workers seeking higher wages listen to their leader as they take part in a strike in Johannesburg, South Africa September 2.

Siphiwe Sibeko/Reuters


Johannesburg, South Africa

South Africa’s civil servants continue to flex their muscles, rejecting the latest government offer of wage increases in a nationwide strike that has reached its 16th day.

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Because the striking workers are teachers, nurses, and other bureaucrats – and not, say, autoworkers – the economic impact of this strike has been much less than the social impact of students unable to learn, patients unable to receive healthcare, and a government unable to properly function. Still, South Africa’s business reputation might suffer down the line.

“Long-term, what this does affect is the perception of foreign investors, particularly after the fantastic experience of the 2010 World Cup,” says Andrew Levy, a labor relations specialist at Andrew Levy Employment in Johannesburg. “People who are here can see this for what it is, but for people who were thinking of coming here, or going somewhere else, they might think, ‘Maybe we’ll do better in Poland or Croatia.’ ”

Economic woes for Jacob Zuma

For the presidency of Jacob Zuma – who ordered his ministers back to the negotiation table this week – the rejection by the two largest unions in the strike, that of nurses and of teachers, is a crushing political blow. After all, it was union members belonging to the massive Congress of South African Trade Unions (COSATU) who formed the bulwark of President Zuma’s campaign support, paving the way for his ascendance to power in 2007. The honeymoon ended quick after that, and it has become clear that COSATU is no longer content to push simply for wages and benefits. Now, it seems, they want a greater share of political power.

“This is a political move by COSATU to flex its muscle within the alliance in government,” says Dennis Dykes, chief economist at Nedbank in Johannesburg. “The government wages bill has risen 17 percent since 2007, and they do realize that their people are not well paid. But in the global environment, you don’t want to draw attention for increases in government spending. You want to bring fiscal discipline.”