South African union said to reject wage deal to end strike, resume car output

JOHANNESBURG (Bloomberg) -- South Africa's biggest union will probably reject the latest pay offer from employers to end a three-week strike that has halted production at General Motors, Ford, Toyota and other automakers because of a clause related to workplace bargaining, a union official said.

The National Union of Metalworkers of South Africa doesn't agree with a condition proposed by the Steel and Engineering Industries Federation of Southern Africa that forbids workers from debating employment issues at factory level, said the official, who asked not to be named because the decision hasn't yet been made public.

Numsa has been listening to feedback from members across the country over the past two days after Seifsa offered a 10 percent wage increase for three years.

The deadline to accept the offer was set at the close of business today.

"We will communicate our final decision on Sunday," said Castro Ngobese, spokesman for Numsa, in an e-mailed response to questions. "Right now, we can't communicate anything."

The walkout by about 220,000 employees since July 1 is costing the industry about 300 million rand ($29 million) a day, according to the employers.

Numsa's strike follows a five-month stoppage in the platinum industry that caused Africa's second- biggest economy to contract in the first quarter. The South African Reserve Bank has revised its growth forecast to 1.7 percent for 2014 from 2.1 percent.

Disrupting talks

"Seifsa hasn't received any official communication from Numsa yet regarding the strike offer," said Ollie Madlala, spokeswoman for the employers' lobby.

The disputed clause in the wage offer, referred to as section 37, is "disruptive to current negotiations," Numsa Deputy Secretary General Karl Cloete said.

The rand has been "influenced by the widening deficit in the current account and balance of payments, and by the succession of protracted labor disputes in the motor vehicle subsector and mining sector in particular," Reserve Bank Governor Gill Marcus said today at the bank's annual general meeting in Pretoria. "The fraught labor relations environment contributed to the decline in domestic economic growth."

The currency has weakened about 0.2 percent this year. South Africa's inflation was 6.6 percent in June, exceeding the central bank's target for a third month.

The trend of striking over wage deals is a matter of concern for the Reserve's Bank Monetary Policy Committee, according to Marcus, with "the risk of double digit wage settlements becoming the economy-wide norm."

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