The financial disaster we now have been attempting to confront, one which has rendered most of our youth unemployed and seen actual per capita incomes falling for eight years, requires a concerted effort between all social companions. Organised enterprise has been seized with the problem – partnering with authorities to create the Solidarity Fund when Covid struck, working to mobilise assets to help many areas of the public sector the place essential expertise are wanted, from the vitality sector to the legal simply system. This has required the mobilisation of big quantities of cash to guarantee we are able to drive an financial restoration.
Yet as we now have been doing all this, we have been confronted final week with the most appalling act of financial sabotage. The Transnet strike is going to cost the economy billions. It is going to set again our efforts to drive a restoration. It will harm authorities income, robbing it of the assets wanted to present poverty aid.
The mining sector has calculated it has misplaced R50 billion up to now this yr due to Transnet’s deteriorating efficiency. It reckons it might have generated one other R100 billion in income have been it not for capability constraints on Transnet rail and ports. That cash would have generated one other R27 billion in tax income, income that might have lined partly an extension of the social aid from misery grant.
Read: Industry calls Transnet out on newest power majeure
Against that background, the choice by United National Transport Union (Untu) and the South African Transport and Allied Workers’ Union (Satawu), to go on strike final week, in the center of negotiations that have been ongoing at the CCMA, is one other extreme blow to the economy. The strike is at very least an act of unhealthy religion given negotiations have been below means at the time and several other courtroom circumstances are testing its legality. It caught each Transnet and authorities off guard.
It compelled Transnet to droop all exercise in its ports, snarling up imports and exports for the complete nation. Miners and plenty of different firms are shedding billions whereas this goes on, with early estimates placing the prices at R6 billion per day. The unions have stated the strike is indefinite and 15,000 staff usually are not going to be working at this time. Today all ports and freight rail usually are not anticipated to function. This is disastrous not solely to apparent sectors linked to direct imports like the medical sector, and exports, like the mining sector, however to the complete, interconnected economy. It additional damages SA’s model, with international cargo operators possible already shifting on to different ports and additional deprioritising SA. This is very unhealthy information certainly.
And what is the struggle about? Transnet, like different state-owned enterprises, is in monetary dire straits. Revenue for the 2022 monetary yr was nonetheless R6.5 billion beneath pre-Covid ranges. It made a R5 billion revenue, solely due to the revaluation of its belongings that allowed it to guide R10 billion in positive aspects, together with a R6.6 billion achieve in the worth of its rail infrastructure. It is carrying virtually R130 billion in debt, with rankings businesses reviewing its credit score rankings for downgrades. Personnel prices for the final monetary yr have been R26.2 billion. In wage negotiations with staff it has now provided 3% will increase and a R7,500 gratuity, cash which it already can’t afford. On the different facet, unions are demanding a 13.5% enhance.
The strike motion makes Transnet’s monetary place far worse. It might set off additional rankings downgrades.
It additionally cripples the economy and offers a extreme blow to authorities’s income. Over the weekend information got here that either side had agreed to a brand new CCMA course of at mediation. This is a step in the proper course, however the strike needs to be suspended instantly whereas engagement occurs.
Several firms have approached Transnet with potential options together with willingly providing to pay elevated charges for Transnet providers. There are additionally additional authorized choices together with declaring port staff to be important staff. Given the financial state of affairs we’re in, this is an choice to severely take into account. Without ports working the complete nation might collapse.
In our joint effort to flip round our nation’s efficiency, the lacking get together has been labour. Where are the unions’ concepts on how to enhance productiveness and Transnet providers to ship a few of that R100 billion in further output that might have been delivered this yr? Where is the dedication to resolve blockages in the logistics techniques? Where is the effort to fast-track deliberate port restructuring and rail public-private partnerships to enhance efficiency and capability?
Instead, we’re dealt a extreme physique blow with out warning, risking tipping the economy additional into the abyss. It shall be in useless – there merely is no cash to meet union’s calls for. For all of us being stricken, it is a horrible blow. But maybe the largest blow is to the standing of Transnet’s unions as credible companions in the effort to resuscitate this economy.
Busi Mavuso is CEO Business Leadership South Africa.
