Strikes fuel possible Recession

A fast intervention is needed in the prolonged platinum strike in order to prevent SA from going into a recession. “SA’s economy is going to lose even more of the growth it so desperately needs,” analysts warned. “We already lost 0.8 percentage points of our growth. So, if we would have grown by 2.7%, then, even if the strike ends right now, we would now only grow at 1.9% – or even less.”

Most countries have ways to intervene in a strike when it causes damage to the particular industry and the economy. The number of people struggling as a result of the strike are not just 70 000 striking workers, but another 55 000 workers in the industry and another 200 000 suppliers to the industry and retailers in the areas affected. This means that more than 300 000 workers are affected and, if one includes their families and other dependents, the number could probably be close to 1.6 million.

The impact of the ripple effect of the strike on the economies of neighbouring countries like Lesotho and Mozambique is just as serious. As for a solution to the current stalemate, analysts propose that arbitration be enforced and workers made to go back to work. Then give arbitrators three months, for instance, to get results and do not allow any strikes in the industry for that time period!

SA has lost in excess of 6.3 million days in the platinum industry this year and about 10 million since 2012 or about 49 days per person employed in the industry.
The mines will not run at full capacity within the next three months at least, or maybe only by the beginning of next year. The strike is in its 17th week and it is madness not to do something from the government’s side.

On top of that foreigners have taken note of the strikes in SA, which his is not a perception that SA should create, as it will influence investment decisions in time to come.

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