An estimation of the impact of the 2012 platinum-sector strike on the South African economy

Abstract

A Leontief-type economic-impact model for 2012 is used to estimate the potential impacts, in percentage terms, of the 2012 platinum-sector strike on the South African economy. Although it is impossible to incorporate and calculate all the potential impacts, such a model can provide an estimation based on sound statistics and methodologies. Understanding the potential, wider economic impacts of strike action can lead to valuable insights for policymakers, businesses and workers. This will hopefully result in improved policies, as well as enriched negotiations to find solutions to deadlocks in wage negotiations before such deadlocks progress to strike action. Data from the Department of Labour (DoL) shows that 103,155 workers participated in the strike in the metal-ores sector during 2012, and company annual reports indicate that this strike action lasted seven weeks on average. Estimates show that the monetary value of ounces lost by the platinum-related mining industry as a result of lost production during the strike periods amounted to R10.6 billion. Two scenarios are estimated that result in a gross domestic product (GDP) loss for 2012 of 0.53 per cent or R16.5 billion (Scenario 1), and of 0.49 per cent or R15.5 billion (Scenario 2). This implies that GDP growth could have been 3 per cent for Scenario 1 and 2.97 per cent for Scenario 2, instead of the actual GDP growth of 2.47 per cent. Exports could have been R9.05 billion higher for Scenario 1 and R8.4 billion higher for Scenario 2. The current-account deficit for 2012 could have been reduced to 4.93 per cent of GDP for Scenario 1 and to 4.9 per cent for Scenario 2, as against the actual deficit of 5.23 per cent. Tax income could have been R3.8 billion higher for Scenario 1 and R3.6 billion higher for Scenario 2. As a result, the government’s budget deficit could have been reduced to 5.13 per cent instead of 5.26 per cent. Expressing employment opportunities lost in terms of annual employment opportunities lost as a result of lost activity shows that this represents almost 25,000 employment opportunities for Scenario 1 and almost 23,300 such opportunities for Scenario 2.