Bruising strikes cost SA hundreds of millions

Johannesburg - Striking South African car workers rejected a double-digit wage increase offer on Thursday and said they would intensify a strike that has crippled production of a major export.

Gold mining firms said they were also preparing for a bruising strike that could come as early as Sunday and would slow bullion output, one of South Africa's largest foreign currency earners.

The wave of strikes in Africa's largest economy has already swept up more than 120 000 workers this month in the auto production, construction and airline sectors while sending the rand to four-year lows on worries that labour strife will slow growth.

The number of strikers could increase by more than 220 000 next week, with textile workers, petrol station attendants, retail auto workers and gold miners walking off the job.

That would mean that about 3% of South Africa's workforce would be on strike.

The main union for manufacturing, Numsa, said its 30 000 members in the auto industry rejected a 10% wage hike from carmakers. The union is demanding 14%, well above inflation that is estimated to run at 5.9% this year.

The auto strike started last week and has hit global carmakers such as Toyota, Volkswagen and Ford. The industry makes up about 6% of GDP and the strike has cost the economy an estimated R620m ($60m) a day.

A strike in the gold sector would cost the economy R349m a day, Harmony Gold Chief Executive Graham Briggs told a news conference, speaking on behalf of the industry.

"Producers lose production, revenue, profit and the confidence of the markets; some may even have to shut down shafts, possibly forever," Briggs said.

The National Union of Mineworkers (NUM), the main union in the gold sector, will give producers on Friday 48 hours' notice of its members' intention to strike over deadlocked wage talks, a source with direct knowledge of the matter has said.

The Chamber of Mines, the industry body that negotiates on behalf on gold producers, said this week it had made a final offer to unions to increase basic wages by between 6% and 6.5%.

NUM, which represents 64% of the country's gold miners, dismissed this offer. Another more militant mining union is seeking pay hikes as high as 150%.

The companies, which also include AngloGold Ashanti [JSE:ANG], Gold Fields [JSE:GFI] and Sibanye Gold [JSE:SGL] say these demands are unrealistic as they are being badly squeezed by rising costs and falling bullion prices.

The government will not intervene in the deadlocked talks, mining minister Susan Shabangu told Reuters in Perth, Australia, on Thursday.

South Africa's declining gold industry was caught off guard last year when violent wildcat strikes spread from platinum to gold shafts, costing R5bn in lost output.

The strife in the mines, rooted in a union turf war, dented economic growth and led to sovereign credit downgrades.

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