Inflation could spike from repeated wage hikes, economist warn, although ignoring union demands threatens to create instability in South Africa.
Johannesburg, South Africa
Last year at this time, South African transport workers unions nearly brought the continent's largest economy to a halt, refusing to offload ships and airplanes until their wage demands were met. The timing couldn’t have been better, at least from a union organizer’s perspective, with the strike called just months before the World Cup.
Then, the union's demands were largely met, but now the South African Transport and Allied Workers Union (SATAWU) is at it again, demanding a 20 percent wage increase over the next two years from the trucking industry’s Road Freight Association.
South Africa's workers unions have enjoyed rising clout in recent years, serving as a crucial member of the ruling alliance alongside the African National Congress and the South African Communist Party. Yet economists have warned that repeated wage hikes risk exacerbating inflation and pushing up the cost of basic goods.
At the same time, ignoring union demands here threatens to create instability in a country that remains one of the safest bases for business in sub-Saharan Africa.
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“One hundred percent of goods are carried by trucks at some stage, either at the end of the line or in some cases all along the line,” says Frank Beeton, an analyst at Econometrix, the Johannesburg based economic-analysis firm. “This could be crippling for South Africa, but it is impossible to predict until we get a sense of whether this strike goes forward and how widely it is spread.”