Unions threaten to intensify rail and port strike after rejecting Transnet 5.3% wage offer

SOUTH African rail and port unions today rejected a revised pay offer by state-owned utility Transnet and said they would intensify a strike underway since October 6 which has hobbled the country’s commodity exports.

Speaking to Bloomberg News, Carestone Damons, a member of the United National Transport Union’s bargaining team said employees would only consider an increase of at least 7%. This compares to Transnet’s latest offer of up to 5.3%. It had previously offered a 5% wage increase.

“Top management earn millions of rands per annum and workers generating this revenue are taking home peanuts,” Damons told Bloomberg. “The workers are adamant that they will intensify the strike and continue the strike” until their demands are met,” he said.

The industrial action has severely reduced staff at key ports that export iron ore and coal from South African mines. Shipments of agricultural goods are also at risk, with fruit farmers raising concerns about the limited shelf life of their products, said Bloomberg.

On Monday, Transnet issued a force majeure releasing it from contractual obligations to deliver export capacity to companies such as Kumba Iron Ore. The Anglo American owned company said it would lose 120,000 tons in exports daily of the steel-making ingredient.

The strike is testing the government’s resolve to rein in state wages. The remuneration of South African state employees accounts for almost a third of total government spending and keeping it in check is key to the National Treasury’s plans to reduce its budget deficit and bring runaway debt under control, said Bloomberg News.

The picture for coal exports is slightly different as port handling is privately owned through Richards Bay Coal Terminal. “For a period of one to two weeks coal exports should be able to be sustained by a draw-down of port inventories,” said RMB Morgan Stanley in a recent report. “Thungela said that it has two weeks of stockpiling capacity on-mine, whereafter it would need to curtail production.”

BusinessLive reported on Wednesday that certain companies had offered to pay an additional level on containers that could help bridge the disparity between pay demand increases and employer Transnet’s offer.

Citing industry publication Cargo Movement Report, BusinessLive said today an additional levy of R148 per container had been offered to Transnet’s terminal handling charges.

Transnet did not say whether it accepted or rejected the offer submitted by companies. “Transnet is considering a number of options and offers from industry in order to avert a protracted strike. These will be communicated with the relevant stakeholders upon finalisation,” it said.