World Economy

Miners' strike will end soon: South Africa minister


An 11-week miners' strike which has ground South Africa's platinum sector to a halt and heightened investor concern about the country will come to an end "sooner rather than later," the country's finance minister has told CNBC.

South African Finance Minister Pravin Gordhan
Jason Alden | Bloomberg via Getty Images

Pravin Gordhan, South Africa's Minister of Finance since 2009, told CNBC that the miners' strike – which began on January 23 – would not last a further 11 weeks and that there was no threat to the future of the platinum industry in the country.

The Association of Mineworkers and Construction Union (Amcu) members are demanding a minimum monthly salary of 12,500 rand ($1,184.20). Miners' conditions in South Africa came into the spotlight in August 2012 when 34 striking workers at Marikana were killed by police.

"As a government, we have actually done quite a lot over the last 18 months to bring parties together and we have a much more non-violent strike at the moment," Gordhan told CNBC.

"I think our focus – government, labor and business – is on a quick resolution and curing some of the inadequacies that have been in the system – migrant labor, housing – but also skills development, career pathing, better communication within this particular environment, and a more institutionalized system within the platinum sector, which didn't have collective bargaining as many of the other mining sectors had."

Sluggish growth

The International Monetary Fund (IMF) has warned of sluggish growth in South Africa, recently downgrading its growth forecast for 2014 by 0.5 percent to 2.3 percent, with growth for 2015 slipping 0.6 percent to 2.7 percent.

"Growth in South Africa continued to decelerate, constrained by tense industrial relations in the mining sector, tight electricity supply, anemic private investment, and weak consumer and investor confidence," the IMF noted in its World Economic Outlook in April 2014.

We've lifted millions out of poverty: South Africa Fin Min

Ahead of this year's elections, the ruling party, the African National Congress (ANC) has come under fire for high unemployment and inequality as South Africa celebrates 20 years of post-Apartheid democracy. The ANC has ruled for that entire timespan.

Responding to criticisms of the ANC's record, Gordhan said: "We're very proud of the 20 years of achievement that we've actually had…We've lifted many millions out of poverty and look at any number around the economy – whether on the fiscal side or in terms of industrial growth and so on – we've done very well."

Gordhan admitted that he was disappointed with unemployment numbers but said that was due to structural features within the economy that were now being addressed.

"We will get more small business; we will have more entrepreneurs; we will find both government and non-governmental ways of actually supporting them as we go further," he said.

"Secondly, we will have a better vocational training system…So the young people are trained better... Thirdly, we have all sorts of plans and incentives in place – special economic zones, employment tax incentives- because the key is…putting some of these initiatives in place so that people can work and people have the dignity of their own wage."

The IMF said in its World Economic Outlook that South Africa needed to prepare "to weather further tightening of global financing conditions by preserving their budge flexibility and, where vulnerabilities are of particular importance, by tightening policies."

Commenting on the U.S. Federal Reserve's steady tapering, or cutback of its stimulus program, Gordhan said that he thought the world was "going to go through probably a two to three year transition. As you get some kind of normalization, so interest rates are going to rise, the search for yield is going to continue and perhaps become a lot more aggressive, that is going to lead to volatility in one form or another."

He said South Africa would need to cooperate with big and emerging market economies to prepare itself for such a situation, adding: "I believe that we're resilient enough to cope with some of this."