CAPE TOWN (Reuters) — Car makers in South Africa signed a new three-year wage deal with militant union Numsa on Friday, industry officials said, easing concerns of a labour dispute in a key export and manufacturing industry.
South Africa's local motor industry, the largest in the continent with hubs in the capital Pretoria and Port Elizabeth, contributes 7.5 per cent to GDP and around a third of the manufacturing output in Africa's most industrialized country.
The deal allays fears of labour unrest potentially affecting car makers such as Ford, Volkswagen and Mercedes Benz SA. The sector produced 616,000 vehicles last year, about 0.7 per cent of global output.
Mike Whitfield, president of the auto industry body, National Association of Automobile Manufacturers of SA (NAAMSA) and managing director of the Nissan Group of Africa said in a statement that "the new wage agreement gives us a platform on which we can plan further investment in the sector."
Industry and union sources had told Reuters on Thursday that the new deal will see workers get a 10 per cent raise in 2016 and an 8 per cent increase in each of the following two years.
"We got an offer which we are taking to our structures and I can say it's a substantial offer. There is a good possibility it will be accepted," Irvin Jim, Numsa secretary general, told Reuters on Friday.
According to NAAMSA, investment by South Africa's seven major car manufacturers has amounted to over 24 billion rand over the last five years. Toyota announced plans in May for a $390 million factory expansion project.
Negotiations over a separate wage dispute between Numsa and the auto component sector are still going on.
The central bank and Treasury have warned that above inflation settlements could have a knock-on effect, hurting consumers already struggling in an economy expected to grow less than 1 per cent this year. Inflation is running at 6 percent.
