Proceedings of 10th Asian Business Research Conference
6 - 7 October 2014, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-62-7
A Critical Analysis of the Impact of Industrial Action in South
Africa
J Surujlal
The purpose of this paper is to provide a critical analysis of the impact of industrial action in South
Africa. As one of the fast growing economies globally, South Africa experiences challenges such
as income inequalities, poor living conditions experienced by people in rural areas, high levels of
poverty, unemployment, and labour-related problems. Industrial actions in the form of go-slows,
pick eting and strik es are often used by work ers to express their discontent regarding the
aforementioned challenges. In 2012, incidents of industrial action rose dramatically from previous
years, impacting on the lives of work ers and the economy. More than 60 percent of the industrial
action involved minework ers and approximately 82 percent were related to wages, bonuses and
other forms of compensation. Other reasons associated with industrial action were the utilisation
of labour brok ers, poor work ing conditions, lack of consultation with work ers on decisions that
affected their lives, and protests against the implementation of E -tolls in the Gauteng province.
This affected jobs, the stability of the economy, investor confidence, and growth. I ndustrial action
may be reduced if employees and unions work together in a consultative process for the
betterment of employees, the organisation, and the economy of the country.
Keywords: Industrial Action, Strikes, Economy, Workers, GDP
1. Introduction
South Africa is regarded as one of the fast growing economies globally. It is described as an
“upper-middle income developing country struggling to emerge from the institutional and
socio-economic shadows cast by apartheid” (Coetzee, Daniel & Woolfrey, 2012:1). Along
with the rapid expansion of the economy and workforce, the country experiences numerous
challenges. Some of the challenges that have continued long after the apartheid era are
income inequalities, poor living conditions experienced by people in rural areas, labourrelated problems, high levels of poverty and unemployment. These challenges, if not
managed properly, have the potential to cripple an economy. This paper draws from
selected industrial actions of workers from different sectors in South Africa and provides a
critical analysis of the impact of such actions.
Industrial action refers to measures taken by trade unions or other organised labour to
reduce productivity in a workplace. Often interpreted as a strike, the scope is much wider;
industrial action may take place in the context of a labour dispute or may be intended to
effect political or social change. Generally, it is unlawful and prohibited unless it is protected
industrial action. Employees who engage in industrial action, which is not protected under
the Labour Relations Act, can be exposed to penalties and disciplinary action. Among the
various types of industrial actions that may be taken, in the South African context these are
go-slows, picketing and strikes.
Industrial action in the form of strikes has increased dramatically since 2008. Figures
provided by FSP Business (2013) reveal the strike figures to be as follows: 57 strikes in
2008, 51 in 2009, 74 in 2010, 67 in 2011 and 99 in 2012. Final figures for 2013 are not
readily available. Close to 60 percent of the workers involved in industrial action were
mineworkers.
_________________________________________________________________________
J Surujlal, North-West University (Vaal Triangle Campus), E-mail: Babs.Surujlal@nwu.ac.za
Proceedings of 10th Asian Business Research Conference
6 - 7 October 2014, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-62-7
These figures put South Africa in the unique position of being the country with the highest
number of strikes for the past five years, which carries serious implications for the economic
growth of the country. Ndaba (2013) argues that industrial action played a huge role in
economists re-evaluating their economic predictions, and forecasting lower economic
growth for the country in the immediate future. South Africa has been struggling to sustain
the low economic growth since the 2008 global economic recession; the industrial actions
have hampered the economic growth and slowed the economy.
According to the Annual Industrial Action Report (2012), it is becoming increasingly difficult
for the working group (15-64 years) to access employment. The main reason for this is
severe shortcomings in education; there is a substantial shortage of qualified science and
mathematics individuals, required to meet the demand in the country. The World Economic
Forum‟s Global Competitive Report (2011-2012) indicates that SA ranks 138 th out of 142
countries in terms of Mathematics and Science education and 133 rd out of 142 countries in
terms of the quality of the educational system. Coupled to this is that of the majority of the
pupil composition in terms of race (Africans), of which only one third completes Grade 12,
which is a requirement for enrolment in most higher education institutions. This exerts huge
pressure on the labour market that demands qualified individuals with good skills.
The current paper examines the most recent published trend of industrial action for January
2012-December 2012. The base document, which formed the basis of this study, is the
Annual Industrial Action Report (2012). Besides the economic implications of industrial
action, other facets of life such as the quality of life and life satisfaction of the citizens are
affected. This, in turn, impedes social cohesion among the citizens of a country. Hence
people tend to become more reactive than responsive when situations arise that require
their action.
2. Reasons for industrial action
The reasons for industrial action vary from sector to sector. Salaries and other forms of
compensation were the main reasons (Table 1) behind approximately 82 percent of the
industrial action in 2012. This is not surprising as the Global Competitiveness report ranked
South Africa at 144th out of 148 surveyed countries, which comprised 99 percent of world
GDP with regard to flexibility of wage determination (Krugel, 2013). Concerning co-operation
in labour-employer relations, the Global Competitiveness report ranked South Africa last of
148 countries, and 147th in terms of hiring and firing practices. It is not surprising, therefore,
that workers appear to lack clear guidance and knowledge regarding labour issues.
Other reasons for industrial action during 2012 included protests against the implementation
of the E-toll system in the Gauteng province, the utilisation of labour brokers by many
organisations particularly the mines, poor or no service delivery, poor working conditions,
inadequate staff, shift work, lack of consultation on decisions which affect employees made
by management of organisations, and employee grading. Industrial action causes ripple
effects across other sectors. Industrial action impacted on the Post Office, universities,
automobile industry, airports, hospitals and municipalities to name a few, where services
and deliveries were either disrupted or halted. In Table 1 provides the top seven causes of
industrial action identified through the Annual Industrial Action Report (2012), and the
resultant number of days lost.
Proceedings of 10th Asian Business Research Conference
6 - 7 October 2014, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-62-7
Table 1: Top seven causes of industrial action and number of days lost
Cause
Number of days lost
Wages, bonus and other compensation
2 699 411
Compensation combined with other factors
56 178
Grievances
20 258
Refusal to bargain
4 740
Working conditions
4 719
Trade union recognition
3 046
Socio-economic and political conditions
3011
Source: Annual Industrial Action Report (2012)
3. Impact of industrial action
Industrial action has become a way of life in South Africa. According to Majokweni (2013),
although the law permits industrial action, it negatively affects the economy through its
impact on jobs, stability, investor confidence and growth. Such actions have begun to
undermine the gains achieved in the past, as well as hinder the progress of urgent issues
such as unemployment, poverty and inequality.
Table 2 illustrates the impact in terms of worker involvement and number of days lost,
ranked in order of the number of workers involved in the industrial action. The total number
of days lost was 3 310 304 days. The direct effect that it had on striking workers was a
staggering loss of R6 666 103 906 in wages.
Table 2 Comparison of impact of industrial action
Action
2011
2012
Work stoppages
Working days lost
67
99
2 806 656
3 309 884
208
244
52 570 736
24 535 813
R1 073 109 003
R6 666 103 906
Working days lost per thousand
employees due to industrial action
Trends in working hours lost
Wages lost due to work stoppages
Difference
48% increase
18% increase
17% increase
decrease
600% increase
Source: Annual Industrial Action Report (2012)
The mining strikes were the biggest in South Africa‟s post-apartheid era. The mining sector
had the highest number of striking workers and involved the highest number of working days
lost. The mining sector in South Africa is the most important economic activity, which
Proceedings of 10th Asian Business Research Conference
6 - 7 October 2014, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-62-7
contributes approximately 9 percent directly and 10 percent indirectly to the GDP (Twala,
2012). According to Van der Schyff (2013), it has successfully sustained approximately one
million jobs. In 2010, South Africa was identified as the world‟s richest country in terms of its
mineral reserves valued at $2.5 trillion. This sector accounts for 60 percent of South Africa‟s
export revenues. The strikes affected export earnings drastically, with the world‟s top
platinum producers Anglo American Platinum, Impala Platinum and Lonmin losing 40
percent of their global production. This translated into a loss of $378 million in 2012 during
the industrial action. The current figure stands at $850 million. The ripple effect of this was a
slow expansion of the South African economy. Schussler (2014) argues that Platinum Gold
mines‟ sales loss (R17.5 billion) makes South Africa vulnerable to currency outflows, and
caused GDP growth to dip below 2 percent; thereby, affecting South Africa‟s attractiveness
as an investment destination.
The effects of the mining strikes affected other sectors, in particular the manufacturing
sector. In the mining sector the wage strike by steel workers cost the economy more than
R300 million or 0.014 percent of GDP daily (Reuters, 2014). In the automobile industry,
production in some of the units came to a halt.
It was not only other sectors that suffered the impact of industrial action by the mines, many
small businesses in proximity to the mines were forced to close due to a lack of business.
Motshegwa (2014) describes the once-crowded towns around the mining area as ghostlike
skeletons, with people sitting dotted in small circles and trade at a standstill. With many
people suffering the loss of income, crime in the mining areas increased.
Table 3 provides an illustration of the impact of industrial action per sector. It is evident that
the mining and quarrying sector was hardest hit. Twala (2012) attributes this to the loss of
support experienced by the National Union of Mineworkers (NUM). NUM was perceived to
represent workers higher up in the hierarchical ladder and to be in league with the
employers. Subsequently, the Association of Mineworkers and Construction Union (AMCU),
which was not bound by previous collective bargaining agreements and was not aligned to
any government structures (Ashman & Fine, 2012), attracted the NUM defectors. In most
instances, this union operated outside the ambit of the law.
Table 3: Impact of industrial action per sector
Sector
Mining and quarrying
Manufacturing
Community, social and personal services
Transport, storage and communication
Agriculture, hunting, forestry and fishing
Wholesale and retail, repair of motor vehicles
Construction
Electricity, gas and water supply
Financial intermediation, insurance, real estate
Number of workers
involved in industrial
action
138 993
56 342
13 877
12 900
11 078
4 170
2 793
1 078
160
Source: Annual Industrial Action Report (2012)
Number of
working days lost
2 728 359
188 804
108 804
135 186
123 369
13 210
10 124
1 484
964
Proceedings of 10th Asian Business Research Conference
6 - 7 October 2014, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-62-7
4. Recommendations
In order to reduce industrial action and the serious impact thereof on the lives of people and
the economy, a few recommendations are made.
The unions who represent the workers have a duty to serve the best interests of their
members. Their duty expands beyond just engaging in collective bargaining on behalf of
their members. They have an important role to educate their members regarding their
actions and alert them to the possible consequences. From the reports on most industrial
actions, it appears evident that while workers had huge expectations regarding
improvements in their working conditions and salaries as a result of the industrial action,
they were not aware of the real implications it would have on their personal circumstances in
terms of loss of income during the strike. They were not aware of how the „no work no pay‟
rule would affect them financially. Therefore, unions should provide a complete picture of the
impact that industrial action would have on the workers.
Many industrial actions were associated with the working conditions of workers. The solution
of the problem lies with the organisation. The reasons for strike action associated with
working conditions are based mostly on the real experiences of workers. To avoid industrial
action, it is important for organisations to heed workers concerns and remedy the situation
timeously. It would be wise to entrust a committee in the organisation to closely monitor
workers concerns and respond swiftly. It is through this committee that workers could
communicate their concerns regarding working conditions with management.
In most of the mines a huge percentage of the workers are contracted through labour
brokers. In many instances, the human resources department does not communicate
directly with these workers, but rather communicates through the brokers. As a result, there
are no direct channels of communication for contracted workers with the human resources
department of the mine. This situation can be avoided if the mines recruit their employees
directly, instead of relying on labour brokers.
Organisations can play a pivotal role in improving the skills and status of their employees by
providing opportunities for them to upgrade their skills and move up the hierarchical ladder.
Research has shown that if such provisions are made, they can contribute to job
satisfaction, job security, organisational commitment and loyalty to the organisation.
Salaries appeared to be the main issue for most of the industrial actions. In most instances,
negotiations began with high demands from unions and a low offer from organisations that
often results in a deadlock. Realistic figures from both parties would reduce the negotiation
period and ensure that workers are aware of the outcome sooner. Organisations can also
play a significant role by structuring salaries in such a way that workers can see progressive
increases over a period of time. Another way that organisations can assist workers is by
offering other benefits instead of a cash component such as food vouchers, electricity
vouchers, or subsidised insurance; thereby, catering for the basic necessities of the
workers.
5. Conclusion
The right to engage in industrial action is part of the South African constitution. While many
countries do not acknowledge this right, and limit opportunities for workers to engage in
industrial action, the only requirement in South Africa is following of the correct procedure
Proceedings of 10th Asian Business Research Conference
6 - 7 October 2014, Novotel Bangkok on Siam Square, Bangkok, Thailand, ISBN: 978-1-922069-62-7
(Schussler, 2014). The exercising of this right, in some instances, may be counterproductive
to one‟s own circumstances as well as the economy of the country.
It is important for organisations to address the huge disparities in salaries as well as take
into consideration the large numbers of workers living in abject poverty. Furthermore,
employers and unions should work together to engage in dialogue to develop strategies to
prevent disputes. It would be heartwarming if they could engage collectively to carve a
common vision for the organisation towards which both management and workers could
work.
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