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Weekly Comment - Week 25, 2014Strikes represent a breakdown in the symbiotic relationship between capital and labour. Each party needs each other, but they also have conflicting interest with regards to the surplus of their common endeavour. It is thus not surprising that they sometimes fight about what level and form of pay is acceptable. Normally, this bust-up is, or rather should be, temporary. In fact, a whole raft of legislation and related institutions have been developed, by successive African National Congress (ANC) governments since 1994, to regulate the process and its resolution. These have been designed specifically to ensure the legitimacy of this process. A social contract has emerged where everybody is allowed a chance to pick a fight over their conflicting commercial and labour interests, but the rules of the fight are well scripted.

The strike in the Platinum sector seems different. It has been going on since January 23rd, 2014 – almost six months now. Over this time it has crippled production in this sector, leading to huge losses for the companies; the workers have not earned anything in that time and the GDP figures, for the country as a whole, have declined. It is a big deal! However, there are three dimensions to the strike which make it even more significant:

  1. It has been organised by a new union, the Association of Mineworkers and Construction Union (AMCU), that is not a member of the Congress of South African Trade Unions (COSATU) and thus is not part of the tripartite alliance with the ANC and the South African Communist Party (SACP);
  2. The wage demands of AMCU, if met, represent a significant change in both quantum and format to previous demands in any sector; and
  3. The existing structures for resolving industrial disputes – both formal and informal – have proved completely ineffective in resolving it.

If AMCU is successful in its call for a R12,500 starting salary for all workers, employers are going to have to change their production processes completely. A starting salary of R12,500 is a step-change from the current arrangements. Companies can be profitable at this level of wages, but not structured, as they are now. There will be fewer workers; those who are retained will be better educated; and more capital will be used i.e. more mechanisation is likely. This is not good for the ANC – higher unemployment is not on its agenda.

A successful AMCU outcome would be extremely worrying for the ANC, for several other politically motivated reasons. Firstly, it would be a direct challenge to its alliance partner COSATU: what worker would support a union that has not been able to give them what AMCU has? Secondly, it would most likely lead to a raft of similar strikes in other sectors – wherever COSATU is weak or underperforming on their members’ expectations. Finally, the ANC has no political relationship with AMCU – unlike the Economic Freedom fighters (EFF). The growth of the EFF is a direct attack on the political power of the tripartite alliance. The ANC thus has every incentive to crush the AMCU strike – and yet it hasn’t been able to. The existing labour dispute resolution institutions have not had any more success either.

This powerlessness suggests that the current social contract over wages and industrial action is being directly challenged by AMCU, with its significant demands in the platinum sector, and the EFF in the political sphere. It is quite remarkable that AMCU has not folded to date, given the pressure on it from the companies, the ANC and the other labour dispute resolution institutions. This indicates a very high level of unhappiness of its workers and the clear rejection of the current social contract around wage negotiations. If this strike proves to be successful, it could very well be the start of a new, very turbulent, chapter in South African business and politics.



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