Why strikes decline as economy slides?

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Why is South Africa experiencing a decline in strike action during an economic downturn?

It is no secret that industrial action can have a crippling effect on the economy. In its 2015 Industrial Action Report, the Department of Labour calculated that on average, South Africa lost a collective 2.5 million working days annually due to strike action between 2005 and 2015.

Problematic

While the South African economy was able to claw its way out of a technical recession, it still finds itself in a vulnerable position.

Any strike action is increasingly problematic as it not only impacts on the employer’s productivity but also the efficiency of the country. However, somewhat surprisingly, history has shown that during times of severe economic downturn, strike actions in the country have tended to decline.

For example, at the start of the economic recession in 2008, South Africa experienced a significant decline in the amount of strikes. The Department of Labour indicates that in 2008, South Africa lost 497 436 of collective working days due to strike action, its lowest level since the 1990s.

However, during 2010, relative economic growth in preparation for the 2010 World Cup, South Africa lost a staggering 20,674,737 working days due to stoppages from various industries.

Uncertainty

Interestingly, South Africa experienced a 38% decline in the number of working days lost between 2008 and 2015.

Last year, the country recorded 122 strike actions and lost a combined 946,323 working days, which is significantly lower than the highs of 2010 (20,674,737) and 2014 (10,264,775).

The South African economy has stuttered from local and international uncertainty, yet experienced swift and peaceful conclusions to various strike actions in some sectors. For example, parties have signed wage agreements in the glass, pharmaceuticals and fast-moving consumer goods (FMCG) sectors.

During times of recession, reason seems to prevail amongst all parties concerned, especially when relating to their demands and how much employers are willing to budge.

The reason behind this is that people are becoming more realistic in their demands and tend to settle quicker than usual. Striking workers do not garner a salary, and loss of salary is something that workers can ill afford, particularly in an economy that is performing poorly.

Mindful

All parties are becoming more mindful of each other’s particular circumstances.

Organised labour is potentially more acute of the conditions organisations find themselves in and employers are becoming more mindful of the fact that they need employees, and that employees need to be rewarded despite an economic downturn.

However, it remains to be seen whether this trend of limited strike action will continue, given that South Africa just came out of a technical recession.

For the sake of business continuity during times of economic uncertainty, parties should remain mindful of each other’s circumstances and if employees do embark on a strike action, they should refrain from acts of violence and acting unlawfully.

It appears that the Courts have become less tolerant of strike violence, particularly where non-striking employees are intimidated for not taking part in a strike.

Click here to download the Industrial Action Report


Aadil Patel | Head: Employment Practice | Cliffe Dekker Hofmeyr | aadil.patel@cdhlegal.com | www.cliffedekkerhofmeyr.com |


 

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