Busisiwe Mavuso | Time to declare energy and transport essential services that would prohibit strike action?

POSTED ON: October 14, 2022 IN by Admin
economy economy

By Busisiwe Mavuso

The dismal state of our energy and transport systems are core reasons why our economy is so crippled.

What’s become patently obvious with the Transnet strike this week, and earlier the Eskom strike that took us to stage 6 loadshedding in June, is that it’s questionable whether labour can be trusted as a social partner to promote the interests of the country. Its actions show it is quite willing to hold the economy to ransom while it demands clearly unaffordable and unrealistic wage increases.

Transnet is on an obviously unsustainable financial trajectory, yet the two main striking unions, Satawu and Untu, are demanding increases of 12% and 13.5% respectively, which are impossible for Transnet or National Treasury to afford. With consumer inflation at 7.6% in August and GDP having shrunk 0.7% in the second quarter, their wage demands are not only out of kilter with economic realities but threaten to choke the entire economy, further devastating the livelihoods of our people.

Before the strike, the rails and ports that Transnet runs were already dysfunctional, both operationally and financially, unable to cope with the volumes of exports, particularly in the mining and agricultural industries. Ships were bypassing SA’s ports to the more efficient and cheaper Maputo, forcing local businesses to truck cargo back to the country.

Now the strike has shut down SA’s ports almost completely and it’s affecting imports as well as exports.

Research by the South African Association of Freight Forwarders (SAAFF) shows that logistics delays to the supply chain cost our economy between R100m and R1bn per day but with the ports now at a standstill, more than R8bn worth of goods each day are not being processed. SAAFF CEO Dr Juanita Maree says that when calculating the total economic cost, the final consequence of the devastating impact is far greater.

“The unintended consequences of the port strikes will be far worse than our energy crisis if left unattended, as the shock to our economy could not have come at a worse time,” she says in a media statement, and questions whether the economic destruction is fully understood by decision-makers.

Given the inertia in reforming the wider transport and rail systems, I also question whether government itself fully appreciates how urgent the situation is. The deterioration of transport logistics have been accelerating this year with many of the root causes still not being tackled. The Economic Regulation of Transport Bill was tabled in January 2020 yet it is languishing in parliament. Why is it that our leaders fail to mitigate the threat that the dysfunctional rail and ports system poses to our economy?

A critical component of the reforms is to establish an independent National Ports Authority yet this is nowhere close to being achieved and competition in ports remains impossible with the current Transnet National Ports Authority regulating its competitors. The logistics sector needs to be fundamentally altered to allow private sector involvement in infrastructure assets, maintenance and movement of goods. BLSA believes this will strengthen Transnet’s revenue streams and sustainability, not weaken them.

Repeated offers from organised business to assist in accelerating this and various other reforms to put Transnet on a sounder operational and financial footing have unfortunately been rebuffed. Similarly, the government seems incapable or unwilling to act against the incidents of wanton sabotage to rail lines, including cable theft, that is clearly conducted by organised criminal syndicates.

Before the strike, the Minerals Council forecast a revenue loss of R50bn this year (following a loss of R35bn last year) for iron ore, coal, chrome, ferrochrome, and manganese exporters as a direct result of Transnet’s inability to export the minerals. Mining companies are now pencilling in further losses due to the strike. Kumba alone estimates the strike will cost it up to R89m a day for the first seven days, which will increase the longer the strike goes on.

The strike also threatens imports and exports in SA’s food and agricultural sectors, which is particularly concerning given that the fourth quarter traditionally has the highest volume of exports, particularly for fruit. Food imports are also high in the fourth quarter and delays to products such as wheat, rice, sunflower oil and poultry meat are likely to accelerate already fast-rising food prices. This is where the Transnet strike will directly hit the poor the hardest, but the ripple effects will ensure higher levels of poverty and unemployment.

The dismal state of our energy and transport systems are core reasons why our economy is so crippled, with unemployment at emergency levels. The only hope of recovery is to get Transnet and Eskom operating efficiently on a sound financial footing. Isn’t it time to declare these essential services that would prohibit strike action? Given the recklessness of organised labour’s actions, we need bold decisions that benefit the country as a whole rather than one constituency, however influential it may be.

*Busisiwe Mavuso (@BusiMavuso2) is the CEO of BLSA. This article first appeared in News24 Business.

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