The Militant(logo) 
    Vol.61/No.46           December 29, 1997 
 
 
Currency Turmoil Rattles S. Africa Economy  

BY T.J. FIGUEROA
JOHANNESBURG, South Africa -Southern Africa is undergoing sharp economic blows spawned by world volatility. Stock markets and currencies in South Africa and neighboring Zimbabwe have been pounded since the late October plunge in world financial markets. At the opening of December, gold slumped to a 12-year low of $288/oz. At the start of this year, it stood at $369/oz, down from a high of $416/oz. in January 1996. The 30 percent slide has sent South African mining companies into a frenzied round of further monopolization and retrenchments.

More than 60,000 jobs in the gold mines have been scrapped here in the last five years alone; economists employed by major banks and mining houses predict that up to 100,000 jobs could be eliminated in 1998 if the gold price continues to fall. Gold accounts for 20 percent of South Africa's exports and 5 percent of Gross Domestic Product.

The collapse of markets and currencies in southeast Asia is the immediate reason for the gold price slide. It is estimated that the Asian region accounts for 40 percent of world demand for base metals. The decline in demand is also hitting the price of other raw materials, including copper and aluminum. Taken together, Japan and south Korea account for 19 percent of world copper demand and 18 percent of aluminum consumption.

Projected layoffs in the mines
National Union of Mineworkers spokesperson Ben Molapo said the declining price of bullion had sent "worrying signals to our members. We are worried about losing jobs. The new year looks very bleak for some of us." The effect of mass layoffs would extend far beyond miners alone: mineworkers are often the only employed family members. Unemployment here hovers around 30 percent.

The Johannesburg Stock Exchange is down 13 percent from its crash in late October. The exchange shed 11 percent of its paper values on October 28 alone, the largest single-day loss since 1987. Billions of rands in South African bonds were dumped, and the currency plunged to new lows against both the dollar and British pound. The Zimbabwe dollar, meanwhile, lost approximately 20 percent of its value on November 14, and in the subsequent week the Harare stock exchange tumbled 18 percent.

In hopes of maintaining their near-dominant position atop the world gold heap, the mining conglomerates here are consolidating. Two years ago, there were six major mining houses listed on the Johannesburg Stock Exchange; today there are two.

In October Gold Fields of South Africa and Gencor announced a merger to create Goldco, billed as the world's biggest mining house. Anglo American Corporation followed a month later with an announcement that it was grabbing up key mines from JCI, a recent "black empowerment" initiative, to create Anglogold. The company will be the world's largest in terms of production and reserves. The new ventures have said they will restructure to do away with unprofitable mines.

Debate on jobs, economic future
These developments, together with the current economic course of the African National Congress-led government and the November passage of the Basic Conditions of Employment bill, have fueled debate over how to confront growing joblessness.

The Basic Conditions of Employment law was passed by the ANC majority in parliament over the objections of all other parties. It lowers the legal work week in South Africa to 45 hours, extends paid maternity leave to women workers, and raises the overtime rate from time-and-a-third to time-and-a- half. The law provides a schedule for lowering the work week to 40 hours in time. The Congress of South African Trade Unions (COSATU) had demonstrated for key provisions of the legislation earlier this year, and while it failed to win certain amendments, the union federation termed the legislation a victory, clearing away much of apartheid labor law.

The government's Central Statistical Service released figures in early November showing that the number of jobs in the nonfarm economy fell by 25,000 in the first half of the year, and that employment had shrunk 1.5 percent since June 1996. That brings the total number of people employed in the "formal" economy to fewer than 5.2 million, out of the population of nearly 44 million.

The figures were a blow to projections in the government's Growth, Employment and Redistribution (GEAR) strategy, which projected the creation of 250,000 new jobs in 1997.

In November, the ANC's Jay Naidoo, minister of posts and telecommunications and former general secretary of COSATU, was met at a union conference in KwaZulu-Natal province by workers chanting and singing denouncements of GEAR. Naidoo was widely quoted in the press as chastising COSATU in his speech for being little better than disgruntled whites, and challenging the labor movement to make its own proposals on economic policy.

Responding to Naidoo later in November at a Bargaining Conference of the Chemical Workers Industrial Union, COSATU Deputy General Secretary Zwelinzima Vavi said the union federation had put forward proposals that differed from those of the ANC government.

These issues will be debated at the ANC's National Conference in Mafikeng, December 16-21.  
 
 
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