Cosatu split could be a disaster for stability - and capitalists

Proponents of capitalism might say the demise of labour federation Cosatu would be good for the economy because the government has handled its partners, of which Cosatu is one, with kid gloves at the expense of growth.

But many doubt that the expulsion from Cosatu of heavyweight affiliate Numsa will be good for business.

Instead, they say, it could lead to disruption akin to that which the country was subjected to when the Association of Mineworkers and Construction Union and the National Union of Mineworkers, battled it out for supremacy on the platinum belt.

If Numsa goes it alone, it will slug it out with the remaining Cosatu affiliates for members, meaning businesses in which Numsa organises could become battlegrounds. Already it is on record that former Numsa president Cedric Gina is readying metalworkers' union Mawusa to replace Numsa in the federation, and moves are afoot by this new union to recruit workers from Numsa.

The metals and engineering sector is still punch drunk from a month-long strike in July and further instability could be fatal to some businesses.

Henk Langenhoven, chief economist at the Steel and Engineering Industries Federation of Southern Africa, said: "Any source of uncertainty would be detrimental to the sector's recovery."

According to the latest figures, the steel and engineering sector experienced a 6.1% decline in production the third quarter compared to the second quarter of this year. Langenhoven said neither the 16% recovery in August nor the 1% further recovery in September could repair the damage of the strike.

The sector is responsible for 34% of manufacturing production, so these numbers drive home the importance of its recovery if manufacturing is to gain momentum, he said.

The split from Cosatu would mean that Numsa's 350000 members would no longer be part of the tripartite ANC-led alliance, which also includes the SA Communist Party. The union has been part of the alliance since 1985.

It intends to fight its expulsion from Cosatu in court .

Coenraad Bezuidenhout, executive director of the Manufacturing Circle, said labour and production stability were priorities, and his organisation would work with any willing partner.

If Numsa does break away, Cosatu could set up an opposition union which would recruit those members who do not support what appears to be a plan by Numsa to start a political party.

Economist at the Free Market Foundation Loane Sharp said competition among unions for members could push up wage demands, but competition for employer recognition would counter this.

"In this fashion, employers, unions and workers will reach a negotiated equilibrium that is good for all parties. In a situation in which one union dominates, wage demands will be unrestrained. Strikes will be prolonged, intimidation will be rife and political attention will interfere with wage setting," he said.

Sharp said union fragmentation was therefore a more sustainable and realistic process than the current environment in which one union dominated.

"A Numsa split from Cosatu is good for workers and employers whose collective interests are not represented by union officials," he said.

Analyst and portfolio manager at BP Bernstein, Makwe Masilela, said a labour realignment might suit companies because workers would no longer be as united.