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 a statement.
The United National Transport Union (UNTU), 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.
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 guarantee facility for Transnet last month and the process of giving it additional support will be finalized 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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Historical, technological leaps, like the Industrial Revolutions, sparked similar fears of mass labour market disruption but ultimately resulted in substantially higher employment and productivity. For instance, more than two-thirds of the world's population lived in extreme poverty before the Industrial Revolution – today, it is less than 10%. This precedent, combined with AI's limited impact to date, may have bred complacency among South Africans, especially policymakers, that AI's impact will be manageable and a net positive. However, this view is shortsighted and lacks nuance. Rapidly increasing advances in areas such as multi-modal and agentic AI are poised to transform workplaces. The vast majority of organisations are planning on introducing or expanding their use of AI. This will see workers requiring new skills, creating new roles, and eliminating others. While the balance of these changes is debated, massive labour market disruption is almost certain. This time is different AI's unique traits, distinct from past technologies, will amplify its impact on jobs. These features include: Cognitive capabilities: Unlike earlier automation that targeted manual tasks, AI can handle complex cognitive work, such as analysis and decision-making. General-purpose technology: Like electricity or the internet, AI's application spans all sectors, driving broad economic impact and broadly fuelling productivity at an unrivalled pace. Self-improvement: AI can help enhance future iterations of itself, unlike previous technologies. For instance, the most advanced nuclear reactor cannot design new reactors, but AI can make better AI. Democratised access: Many AI tools are freely or cheaply available, unlike costly previous industrial technologies that were often limited to large, wealthy organisations. Rapid adoption: Generative AI, for example, surged from obscurity to global prominence in just three years. Now, South African workers use generative AI more than those in the US and UK. These characteristics illustrate why AI will disrupt labour markets at an unprecedented pace and scale, but not all countries and groups are equally vulnerable. SA has breathing room High-income countries, with more white-collar jobs, face earlier AI-driven disruption. For instance, 34% of European Union jobs are exposed to AI automation, compared to 19% in the African Union, according to the International Labour Organisation (ILO). Ageing populations and high labour costs may also accelerate AI adoption in developed markets. Young workers, often in entry-level roles, are particularly at risk. The ILO notes that youth hold jobs most susceptible to automation, potentially blocking their entry into the labour force. This is particularly pressing for Africa, with 350 million young Africans expected to reach working age by 2050. In other words, emerging economies like South Africa may be partially shielded from the initial waves of AI automation, but when it inevitably arrives, the country could be especially vulnerable due to its large, predominantly young labour force. In conjunction with this, AI will likely also drive massive productivity gains and create new, currently unforeseen jobs, but the transition period could be long and hard. Moreover, it could ultimately further entrench South Africa's world-leading inequality. Charting a path forward South Africa has a narrow window, as short as two to three years, to harness AI's productivity gains while mitigating its fallout. Key actions stakeholders can take include: Policy development: Political leaders must move beyond vague rhetoric and adopt nuanced, thoughtful policy positions on AI. The government should finalise a national AI strategy, released for comment in mid-2024, to address labour market impacts. Digital infrastructure: Expand reliable, high-speed internet nationwide, resolving disputes over providers like Starlink to ensure equitable AI access. Reskilling programmes: Invest in large-scale training to equip workers with AI-relevant skills and update school and tertiary education curricula for emerging roles. Responsible AI governance: Regulators and organisations should integrate AI oversight into corporate governance, aligning innovation with national development goals. Moreover, AI needs to be a cross-cutting responsibility in government. Social protections: Plans for displaced workers need to be considered now – there are nearly 19 million grant recipients, compared to a tax base of 7 million. Growth measures and/or new revenue sources will need to be found if the if the South Africa stands at the edge of an epoch-defining labour shift. The question is whether we act proactively or react in a crisis. - Dr Emile Ormond has an interest in policy analysis and risk managment.