Transnet workers affiliated with the United National Transport Union (UNTU) will go on strike tomorrow (6 October 2022), potentially harming South Africa\u2019s export sector and an already fragile economy.<\/p>\n
UNTU and its members have rejected Transnet\u2019s wage offer of a 1.5% pay increase, saying that the offer must be aligned with the rising cost of living and current inflation. Annual inflation in South Africa is currently 7.6%.<\/p>\n
The union added that the wage offer was an insult and demanded an increase of between 12% and 13%.<\/p>\n
Transnet said its offer to labour unions of a 1.5% pay increase and a once-off payment of R10,000 before tax is reasonable as it considers the company\u2019s \u201cfinancial and operational challenges.\u201d<\/p>\n
\u201cTransnet has consistently made the point that its wage bill currently makes up over 66% of monthly operating costs,\u201d the company said in a statement. \u201cThis is not sustainable, particularly given the current operational and financial performance.\u201d<\/p>\n
The South African Transport and Allied Workers Union (SATAWU) said it will be joined the strike on Monday (10 October) and will be sending a 48-hour notice to Transnet by the end of the day on Wednesday (5 October).<\/p>\n
Possible impact on South Africa\u2019s Economy<\/strong><\/p>\n Transnet\u2019s rail and port facilities are critical to South African exports of bulk commodities such as coal, iron ore, chrome and manganese.<\/p>\n However, over the last couple of years, South Africa\u2019s railroad network is increasingly being hit by vandalism, sabotage and a shortage of locomotives.<\/p>\n These challenges have meant that Transnet has been struggling to deliver coal from mines concentrated in Mpumalanga province to the continent\u2019s most extensive export facility, Richards Bay Coal Terminal (RBCT).<\/p>\n According to Bloomberg, RBCT increased its capacity to 91 million tons a year, but rail bottlenecks have decreased its annual exports significantly since 2017.<\/p>\n Producers, including Thungela Resources and Exxaro Resources, are already unable to exploit the full potential offered by a surge in global demand for coal burned at power plants because of the challenges faced by Transnet \u2013 and the union strike will only deepen the inconsistent and poor rail performance.<\/p>\n Transnet\u2019s deteriorating infrastructure, coupled with the coming strike action, will likely harm South Africa\u2019s mining industry and an already fragile economy.<\/p>\n According to Stats SA, 28% of South African coal production is exported, and in 2021 South Africa\u2019s shipments of mineral fuels, including oil, posted the third-fastest gain in value, up by 49.51% year-on-year, generating $10.3 billion (R183 billion).<\/p>\n South Africa’s exports are already under pressure, with the South African Revenue Service\u2019s (SARS) trade statistics for August 2022 showing the country’s trade balance surplus slipping to R7.18 billion – far lower than expectations of R24 billion.<\/p>\n The outlook for trade in the coming months is bearish, with the banking sector noting that various local developments are weighing down South Africa\u2019s prospects \u2013\u00a0 load shedding being the biggest blight.<\/p>\n Transnet says it has applied to the CCMA to convene conciliation discussions over wage negotiations. The unions say that they will continue to strike if the state-owned freight company doesn\u2019t bring something more meaningful to the table.<\/p>\n
\n