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Is this strike season different?

‘It’s not just the lower-income groups that are struggling … your middle income groups are feeling just as much of the brunt’: Chris Jacobs – director, OIM International.

FIFI PETERS: Strike season seems to be heating up lately. Quite a number of workers are on strike at several companies so far.

Just look at Sibanye-Stillwater’s ongoing protests at its gold operations. ArcelorMittal also announced that its workers were on strike last week, as did York Timbers. In fact, the unions representing public sector workers indicated that a protest, a downing of tools over pay at the South African Revenue Service, Sars, could be in the pipeline – presumably if they don’t get their way.

But just to look at this year’s strike season and what could be different compared to previous seasons, I’m joined by Chris Jacobs, the director of OIM International. Chris, thanks for joining [us]. Always a pleasure to speak with you. What do you make of the current protests under way?

CHRIS JACOBS: Well, Fifi, good evening and thank you very much for the opportunity. Now it’s very interesting, because I think we need to draw a line in terms of the time periods. Up until, let’s say, February this year, things seemed to be going quite well. We had a couple of resolutions in some of your smaller to medium-sized organisations which [ended] well. We had, for example, on a different level, also the parliamentary agreement in terms of workers there.

But then we sit with the current strikes, like the Sibanye one. We had the Clover strike, the Numsa strike at ArcelorMittal. We sit on May 25 with Sars going out on a full strike.

So one of the things which I see has happened – and everybody is referring to [it] – is that the economic situation, not just in South Africa but worldwide, has changed tremendously in the aftermath of the invasion of the Ukraine.

So what we are currently sitting with is with a situation where more and more countries worldwide are moving into quite difficult inflationary situations. That is a major thing in terms of changing the mindsets and the views that we have on both sides of the table and in the negotiations going forward. That, on the one hand, doesn’t [augur] well for us going forward in terms of the upcoming elections with regard to things such as the platinum industry, the public service. And what we are currently seeing is going to happen at Sars as well.

FIFI PETERS: In terms of Sars, I believe the offer they have tabled is a 0% increase. I stand to be corrected, but if that’s the case, then that’s not really going to fly in this environment where the cost of living itself is flying.

CHRIS JACOBS: Exactly. So I think if we want to be reasonable and try and see the views on both sides of the table, it is no longer a situation of your lower income groups having great difficulty in terms of the cost of living. If we talk about the real cost of living on the one hand, what we are being told is that currently our inflation rate is around 5.9%. But I believe that for anybody going shopping and trying to buy a certain pocket of goods which you could buy [as recently] as December last year, for example, and compare that to the cost of goods now, there is a massive difference already.

It’s not just your lower income groups. I believe and I’ve seen and I’ve experienced that your middle income groups are feeling just as much of the brunt in terms of this.

Add to that interest rate hikes. Especially again, if we look at your middle income groups, people often are indebted for things such as housing, cars and so on, and they are feeling it just as much as your lower income groups. An interesting thing for me is, if one looks at the negotiators around a table going forward, [in the current] situation, those who are negotiating on the side of the union, and those who are negotiating on the side of management, I believe, find themselves in the same storm. They may be in different boats at this stage, but they find themselves in the same storm.

That is going to be an interesting thing when people meet up going forward for negotiations – whether it’s in the platinum industry, whether it’s a number of other companies which are going into negotiations very soon.

I hope that that may lead to a better understanding of one another’s positions.

On the other hand, what we can probably also see is that they find themselves very much in a dire straits situation with regard to very much a stark reality in terms of our economic situation currently. There’s no situation where there’s any light in the tunnel in the short to medium term.

FIFI PETERS: I agree with you. It is not costing me only 5.9% more in terms of my groceries than it did a year ago. It’s costing me more than that. But does that mean, Chris, that you are saying that even companies that table inflation-related increases might have difficulty in getting unions to agree to an inflation-related increase in this environment, given that the price pressures that they are feeling are a lot more than the 5.9%? Is that what you’re saying?

CHRIS JACOBS: Yeah, definitely so. Often the whole concept of cost of living is being used, [that] being the inflation rate. And then very often companies would go for a specific wage increase with, let’s say, plus-2% to cover that. It’s not about taking sides here, but the fact of the matter is we all find ourselves in this storm.

As you quite rightly said, you’re paying much more for that same basket of goods than you did at the end of last year. That’s a fact, that’s what all South Africans feel. That’s what they experience when they go for the very basics in terms of shopping.

That’s why I’m saying it’s going to be very interesting, because both sides of the table in terms of the negotiating table are experiencing this. I doubt whether we are going to get away with just inflationary rate increases. That was fine up till January this year, but our circumstances have changed tremendously in the meantime.

FIFI PETERS: With that said, companies also need to be mindful of raising their expense bill to a point that renders their operations unsustainable, because a lot of these increases are [over] more than a year. A lot of these wage deals are for more than a year. You’ll find for most of them it’s a three-year wage deal that’s concluded.

The outlook for the economy is still one that’s pretty fragile. We’ve just had the Reserve Bank downgrading growth. We don’t know how low it will go, and therefore companies would probably want to avoid a situation in which they find themselves unable to operate sustainably, because we all know when wages go up they can’t go down.

CHRIS JACOBS: Yeah. In a short space of time we are in survival mode again. The first and the second Covid waves brought many companies to their knees. And again we are in a similar situation for different reasons. Already I think the general sympathy back then was we need to survive, [that] we need to all get in there and keep the company going.

I think that with the changing circumstances that same sympathy that we experienced during Covid may not be relevant any more, and therefore we may see more adversarial negotiations than before.

I think also from management’s side, as well as the side of the unions, they would be very reluctant to go into longer-term agreements, typical three-year agreements. Probably at best we are going to see one-year agreements in most of these cases, based on ‘We have to keep the company going’. Things may go even worse than we are currently experiencing and, if we want to keep our doors open, we need to make certain compromises. So I think we are also in for short-term agreements.

FIFI PETERS: Chris, thanks so much for your time. Yeah, it does look like the middle ground is going to be a lot trickier to navigate this time around. It will really be interesting to see how everything unfolds. We’ll leave it there for now. Chris Jacobs is a director at OIM International.



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