South African business confidence hit by strike action

11 August 2011

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11 August 2011 | Angeline Albert

Confidence in the economy among South African companies has become a “casualty” of the strike season and global events, business leaders have said.

Business confidence fell in July according to the South AfricanChamber of Commerce & Industry’s (SACCI) Business Confidence Index (BCI). It dropped to 99 points in July down from 102.4 in June. A score below 100 indicates a contraction in confidence.

Released yesterday, the chamber said the monthly index had deteriorated to its lowest level for 2011 and revealed the biggest fall since 2009.

With the global economy broadly characterised by stagnation, business confidence will continue to be a casualty with the consequence that positive employment prospects are further delayed, it said.

The BCI, which is a composite of 13 indicators such as retail sales and inflation, has been hit by recent strike action. Last month a strike took place in the petroleum sector over wages. Workers downed tools on 11 July, leading to fuel shortages in provinces such as Gauteng and KwaZulu-Natal. At the end of July, unions accepted a 8.5 per cent wage increase.

Last week, Rea Vaya bus drivers embarked on a week-long illegal strike leaving 35,000 daily commuters stranded. They were protesting about working shifts proposed by bus company PioTrans.

“Domestically, the strike season is putting further pressure on an already embattled economy. Wage demands in excess of prevailing inflation levels are impacting on the ability of businesses to create employment and thereby contribute to poverty reduction,” said SACCI.

It said that with crises in Greece and the US dominating debate in July, excessive public spending has to be rectified “to ensure fiscal and economic sustainability in the long-term”.

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