President Jacob Zuma has warned that the ongoing unrest in the countries mining sector could see the South African economy plunge into a recession that could leave millions jobless.
The strike action has taken place at a number of mines around the country with the latest outbreak of protest action taking place at Gold mines. The sector-wide strikes began at the Lonmin Platinum mine last month, when 3,000 workers downed tools to demand a pay increase. The six-week long strike was marred by violent clashes between strikers and the police, resulting in the deaths of 45 people when Police opened fire on a crowd.
Those workers at Lonmin appear to have been the tip of the iceberg as the mining corporation gave into the miner’s demands, agreeing to pay increases of up to 11% and 22%. The miner’s who work extremely long hours in very dangerous conditions to dig up the most precious metals in the Earth complained that their pay was a pittance.
The spread of strikes won’t only strain mining companies’ margins-Lonmin said Thursday that its settlement will increase its labour costs by 14%, but it will also have wider implications for South Africa’s economy.
President Zuma said: “The impact goes beyond the mining sector. The manufacturing sector, especially the fabricated metal products sector, is already showing signs of strain. We cannot afford to go into a recession and revert to the 2008 and 2009 period when the country lost close to a million jobs, from which we are still battling to recover.”
The South African mining industry contributes 5% to the nation’s wealth and a fall in production has raised fears that other mining companies will give into striker’s demands, forcing the rate of inflation up beyond its current level of 5%. If more miners are able to secure a hefty wage hike then it could lead to the mining companies being forced to lay off workers where the unemployment level is already around the 25% mark.
Gold mining company Lonmin has said demands for a R12, 500 salary will put thousands of jobs at risk and challenge the viability of the business. Finance Minister, Pravin Gordhan last week also warned that the unrest in the mining sector will damage economic growth, job creation efforts and investment opportunities.
“Everybody in South Africa has the responsibility to ensure that we boost the confidence in our economy and in our country. What we say, what we do, and the violent acts we engage in or the incitement of violence or perpetration of violence undermines confidence in the … economy,” he said.
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