Transnet averts strike as unions accept pay deal

South Africa’s state-owned ports and freight-rail company reached a pay deal with its two recognised labour unions, averting a strike that threatened to disrupt mineral and agricultural exports.

The agreement, which followed an arbitration process led by the Commission for Conciliation, Mediation and Arbitration, provides for 6% annual increases for three years, including the current financial year, Transnet said in an emailed statement.

Read: Government to provide R51bn guarantee to Transnet

The United National Transport Union, which represents more than half of of Transnet’s 46 000 employees, had previously rejected a wage increase offer of 6% annually in the first two years starting April 1 and 5.5% in the third year.

“The finalisation of the three-year wage agreement provides labour stability and will enable the company to focus on its immediate strategic priorities of improving operational and financial performance,” Transnet said in the statement.

The deal includes increases to basic salary, pension fund contributions, medical aid subsidies and housing allowances, the company said. Both unions — UNTU and the South African Transport and Allied Workers’ Union — have accepted the offer, it said.

The above-inflation pay increase will put further strain on Transnet’s finances. Moody’s Ratings has placed the company assessment on review, warning that it will run out of money for operations and debt-servicing within three months unless it gets a government bailout.

Read: South Africa arbiter proposes more pay to avoid logistics strike

South Africa’s government said this week it will give Transnet additional guarantees to settle all its debt that falls due and execute its capital-investment program.

Transport Minister Barbara Creecy announced the approval of a R51 billion ($2.9 billion) guarantee facility for Transnet last month and the process of giving it additional support will be finalised by July 25, according to the Department of Transport. The company’s five-year corporate plan shows it needs to repay R99.6 billion.

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