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Cablegate: South Africa: April Labor Notes

VZCZCXRO1002
RR RUEHBZ RUEHDU RUEHMR RUEHRN
DE RUEHJO #0057/01 0931022
ZNR UUUUU ZZH
R 021022Z APR 08
FM AMCONSUL JOHANNESBURG
TO RUEHC/SECSTATE WASHDC 6145
INFO RUCNSAD/SADC COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHJO/AMCONSUL JOHANNESBURG 2905

UNCLAS SECTION 01 OF 02 JOHANNESBURG 000057

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ELAB ECON ENRG SF
SUBJECT: SOUTH AFRICA: APRIL LABOR NOTES

JOHANNESBU 00000057 001.2 OF 002


Summary

1. South Africa's statistical agency, Stats SA, reports that
unemployment dropped to 23 percent as of September 2007, though
the number of discouraged workers also increased. Labor
federation COSATU threatened strike action over proposed 53
percent increases in electricity tariffs, and suggested an
alternative tiered pricing structure that would limit price
increases for poor households. Bayside smelter employees are
facing layoffs after its owner, BHP Billiton, was forced to cut
electricity consumption; the metalworkers union estimated 20,000
families in the Richards Bay area may be affected. Labor
inspectors forced the shutdown of a wood manufacturing factory
in Pietermaritzburg over egregious health and safety violations.
End Summary.

Unemployment Drops to 23 Percent According to Official
Statistics

2. The latest Labor Force Survey (LFS), released by Stats SA on
March 27, indicated that unemployment dropped to 23 percent as
of September 2007. The LFS noted that the employment growth
over the past three years had been substantial but also noted
that a decline in the labor force from September 2006- September
2007 resulted in a lower unemployment rate. The corresponding
increase in discouraged job seekers resulted in the broader
definition of unemployment (to include those willing to work but
who have not been actively job hunting in the past four weeks)
remaining at 37 percent. (Note: this figure was not published
in the latest LFS but was calculated using the raw data
provided. End Note.) The LFS noted that younger people
disproportionately accounted for the increase in discouraged
workers.

3. The number of domestic workers increased rapidly to 1.06
million during the twelve months ending in September 2007, with
domestic workers now accounting for 8 percent of the labor
force, according to LFS data. This increase, together with
rising numbers of community workers (also mostly female), is
said to have accounted for a substantial drop in unemployment.

4. A number of local economists have queried whether the
economy created the number of jobs implicit in the decline, and
compared or attempted to compare LFS data with the Quarterly
Employment Survey which also was released on March 27. One
economist noted that data suggested 660,000 jobs had had to be
created between March and September 2007. Another analyst said
that the data showed 34.7 percent increase in employment in
commercial agriculture, for which he had no explanation.

Labor Federation Threatens Strike over Electricity Fee Hike

5. The Congress of South African Trade Unions (COSATU) has
applied for a section 77 notice which would allow it to call for
protected strike action with regard to planned 53 percent
increase in electricity tariffs. South Africa's electric
utility Eskom plans to substantially increase generating
capacity to keep pace with increased demand, and has already
increased its rates by 14 percent in December to permit to fund
capital expenditures of R340 million as well as increased costs
of coal. Consumer price inflation is currently running at 9.8
percent, and expected to increase further after 8-12 percent
increases in gas and diesel prices this week.

6. COSATU has said that an increase would have "devastating"
consequences for South Africa, affecting not just consumers but
also job creation, as small and medium business could be forced
to close, and larger businesses, like mining company Goldfields,
to retrench some of their workforce. COSATU has suggested a
sliding scale price structure with heavy industry and
high-income/high user households being charged more per unit,
and poorer households paying less. The labor federation has
also demanded consultations and a price freeze until their
conclusion. White trade union Solidarity has said it will
look at legal remedies should any of its workers lose their jobs
due to the Eskom crisis.

7. Comment: Although public service and other workers received
relatively high wage increases in 2007, inflation has already
consumed any real wage increase. Apartheid- era housing
policies mean that many low-income workers live a substantial
distance from their workplace and spend a high proportion of
their disposable income on transport costs, which are also
increasing rapidly in line with world oil prices. Food prices
are also increasing at higher than average rates, putting more
stress on household budgets of the poor. Eskom's rate
increases, which have to be approved by its regulator and thus
are seen to be under government control, make it a very visible
target for frustrated workers and unions. Pocketbook issues
are likely to lead to another active strike season in May and
June of this year. End Comment.


JOHANNESBU 00000057 002.2 OF 002


Electrical Engineer Wins Employment Equity Case

8. The South Africa Report published in its February 8 edition
a report of a high court decision that prohibited the Tshwane
municipality for sanctioning a senior electrical engineer
working for the city for opposing its employment equity
(affirmative action) policy when this was likely to endanger the
public and safety of fellow employees. According to the
report, the engineer raised concerns about being forced to
appoint under-qualified black electricians to perform dangerous
operations over better qualified whites after a newly-appointed
development manager changed company policy so that only
employment equity candidates could be considered. After his
management failed to support him, the engineer then sent letters
of protest to the Engineering Council and the Department of
Labor, noting that this policy endangered both the public and
the electricians themselves. The high court lifted the
disciplinary measures imposed on the engineer and censured the
Tshwane municipality.

SIPDIS

9. According to primarily white trade union Solidarity, South
Africa currently one engineer for every 3200 citizens, compared
to Europe (roughly one for every 250) and the US (one for every
4-500 citizens).

More Eskom fallout: Layoffs for Smelter Workers

10. BHP Billiton is likely to lay off between 400-800 workers
at its Bayside aluminum smelter in Richards Bay, after the
company received notice from electricity utility Eskom that it
needed to cut consumption levels by 10 percent. The National
Union of Metalworkers of South Africa (NUMSA) has said that
these layoffs would affect 20,000 families in the area, and has
called for consultations to adopt a social plan to minimize the
impact on workers. BHP Billiton recently fired its banker,
Standard Bank, after one of the bank's employees suggested in a
meeting with the government that the Bayside smelter be shut
down entirely in order to save electricity.

Labor Inspectors shut down Wood Factory over Safety Issues

11. Inspectors from the Department of Labor shut down a wood
manufacturing plant in Pietermaritzburg on March 7, after
finding that electrical equipment was sufficiently hazardous to
warrant the shut-down. A variety of other occupational health
and safety violations were also discovered, and the state of
toilets, canteens, and change rooms was described as
"appalling." The factory was given 60 days to come into
compliance.

Teachers Finally Sign Pay Agreement

12. Teachers joined other public servants on strike in May and
June of 2007, and returned to work with other public sector
workers but until recently were working without an agreed
contract. The contract, scheduled to be signed on April 2,
would give teachers a 12 percent pay raise encompassing the 7.5
percent given to all public sector workers and a 4 percent
occupation-specific increase as well.
COFFMAN

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