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TheStreet Open House

Municipal Workers In South Africa Threaten Strike

Stocks in this article: MCO

RODNEY MUHUMUZA

JOHANNESBURG (AP) â¿¿ Some 200,000 workers across South Africa will stop working later this week to protest official corruption and poor pay, a spokesman for the South African Municipal Workers' Union said, in action that will increase pressure on an economy already reeling from the impact of wildcat strikes in the crucial mining sector.

The soon-to-be striking workers have no specific wage demands but hope to force President Jacob Zuma's government to put in place "a proper wage structure" so that jobs and associated salaries are properly graded, said Tahir Sema, the spokesman of the municipal workers' union, on Monday.

South Africa has up to 300,000 municipal workers, according to Sema, who denied they were inspired by strikes over low pay that have spread across South Africa since August.

"The workers feel that they deserve more," Sema said. "This is about ensuring pay parity in the sector."

Citing the impact of unresolved strikes in the crucial mining sector, the credit rating agencies S&P and Moody's have downgraded South Africa's credit rating. In cutting South Africa's long-term sovereign credit rating from BBB+ to BBB last week, S&P said the outlook of Africa's largest economy was not positive.

"The negative outlook reflects our view that the medium-term political, economic, and fiscal ramifications of South Africa's social tensions could deteriorate beyond our current expectations," the agency said. "The difficulty of addressing economic and social imbalances could be exacerbated by increasing external pressure in the context of sluggish global growth or investor risk aversion."

About 80,000 mineworkers, representing 16 percent of the mining workforce, are currently striking across South Africa. It remains unclear how these strikes will be resolved, with some employers declaring them illegal. The strikes have been marred by violence, most notably an incident on Aug. 16 when police shot and killed 34 miners at a platinum mine in Marikana, northwest of Johannesburg. Analysts say the Marikana strike may have motivated strike action by mineworkers elsewhere, as the Marikana miners in the end succeeded in winning a hefty 22 percent pay raise.

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