Strike over wages hits South African auto sector

Work stoppage could spread across the nation

CAPE TOWN (Reuters) — Workers downed tools on Monday at the South African unit of Japanese auto maker Toyota, the company said, signaling the start of a nationwide strike in the auto sector over wages.

The strike, which could affect over 30,000 assembly line workers, was called last week by the National Union of Metalworkers of South Africa (NUMSA).

South Africa's auto industry contributes at least six per cent to the country's GDP and 12 per cent of its total exports. The stoppage is likely to compound the woes of Africa's largest economy, where unrest in the mining sector has slowed growth.

"All manufacturing and assembly production at the plant are shut down," said Leo Kok, the spokesman for Toyota, the largest vehicle exporter in South Africa.

Toyota's manufacturing plant is in the port of Durban and Kok said the company's national parts centre in central Gauteng province was also affected. More than 80 per cent of the company's workforce of 8,000 was absent on Monday, Kok said.

Auto workers want 20 per cent wage hikes, up from an initial demand of 14 per cent, well above the central bank's projected average inflation rate for the year of 5.9 per cent.

Major carmakers in South Africa, which also include Ford, General Motors and Nissan, have offered a six per cent increase during negotiations to replace a three-year wage deal which ended on June 30.

Strikes also loom in South Africa's mining sector with unions seeking pay hikes that range from 15 to 150 per cent, which companies can ill afford as metal prices slump.

A fresh round of labour unrest will be a political headache for President Jacob Zuma and the ruling African National Congress. They have faced criticism for their handling of last year's wave of violent wildcat strikes in the country's mines.

More than 50 people were killed in the labour violence, which triggered sovereign credit downgrades.

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