South African car industry fears impact as union starts strike

South Africa’s biggest metalworkers union has launched an indefinite strike, seeking pay rises and threatening to block supplies of parts to make new cars and accessories, according to industry and union officials.

With approximately 155,000 members organised in the sector, the National Union of Metalworkers of South Africa (NUMSA) on Tuesday called for a total shutdown of the engineering industry after wage talks with employer bodies reached a deadlock and arbitration failed.

“We are left with no choice but to strike and to withhold our labour indefinitely until the bosses give into our just demands,” NUMSA said in a statement.

The union organised marches and rallies across the country on Tuesday, with thousands attending a march in downtown Johannesburg where protesters wearing NUMSA’s trademark red colours held up placards including, “An injury to one is an injury to all.”

NUMSA had sought an 8 percent across-the-board wage rise in the first year of a pay deal, and an increase equal to the rate of inflation plus 2 percent for the following two years. Annual inflation is currently about 5 percent.

Industry body Steel and Engineering Industries Federation of Southern Africa had offered 4.4 percent for 2021, inflation plus 0.5 percent in 2022 and inflation plus 1 percent in the third year.

Lucio Trentini, chief executive at the federation which represents more than 1,000 firms, from small family-owned businesses with less than 20 employees to large listed companies, said a poll among members on Tuesday showed a worker absenteeism rate of around 26 percent.

“And I fear … that this number will grow as the strike continues through the week,” he told the Reuters news agency.

Economy hit by COVID

Trentini said they were in contact with NUMSA to try and reach a “mutually acceptable” compromise and prevent a repeat of a damaging four-week strike in 2014 that cost the economy an estimated 6 billion rand ($398m) in lost output.

Smaller union, UASA, said it was balloting members to determine if they also supported strike action, with a final decision expected on Friday.

South Africa’s economy, including its export-focused car sector, was hit hard by the COVID-19 pandemic, making employers reluctant to give in to union demands for above-inflation salary rises.

Car sales fell by roughly 30 percent last year for both the domestic and export market, hitting major brands such as Ford, BMW and Nissan which all have local plants.

“We urge parties to speedily resolve the impasse and prevent long-term damage and possible line stoppages to vehicles being assembled in SA and abroad,” Renai Moothilal, executive director at the National Association of Automotive Component and Allied Manufacturers, told Reuters.

Mark Roberts, a lead convener at the Retail Motor Industry Association, said if NUMSA’s strike lasted more than a week, supplies could be affected.

Separately, the country’s largest trade union federation called on its members to stay away from work on Thursday.

COSATU, which is aligned with the governing African National Congress party but is sometimes critical of its policies, accuses the government of economic mismanagement during the coronavirus crisis.

It wants to pressure policymakers to adopt a looser fiscal stance at next month’s mid-term budget.