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June 25, 2025

Wage Dispute Threatens Sector That Makes Up Over 20% Of SA’s Manufacturing Output

The potential strike by more than 100,000 workers is threatening the survival of an industry that has long been hobbled by electricity-supply constraints and logistics challenges.   

[Image: Pexels]

A looming standoff over wage hikes in South Africa’s automotive sector could bring the industry to a grinding halt, threatening a sector that makes up over 20% of the country’s manufacturing output and further straining an already struggling economy.

The National Union of Metalworkers of South Africa (NUMSA), the nation’s largest labour union, is pushing for a 10% pay increase from automakers including BMW South Africa, as well as local operations of Toyota and Ford. The upcoming negotiations will set wage agreements for the next three years.

While the demand far outpaces the current inflation rate, by more than threefold, it’s actually NUMSA’s “most modest” opening proposal in at least four bargaining cycles. The union says the demand reflects a tough environment, with growing concerns about the long-term sustainability of local vehicle and component manufacturing.

Bloomberg reports that the potential strike by more than 100,000 workers is threatening the survival of an industry that has long been hobbled by electricity-supply constraints and logistics challenges.

A sluggish economy has also driven a shift in the new vehicle market, with consumers increasingly buying imported vehicles.

Almost 62% of light vehicles purchased in South Africa last year sold for less than R500,000, according to Paulina Mamogobo, the chief economist at Naamsa, the Automotive Business Council.

“The economy isn’t performing well, and a flat 10% increase, along with some of the other challenges, will negatively impact the performance of businesses,” said Siyabonga Mthembu, a partner at BDO South Africa.

“International companies operating in South Africa’s automotive sector are particularly at risk and will have to consider survival strategies such as market diversification.”

“Sometimes, looking at pay in isolation of other factors at play can be very dangerous, and I think all the parties need to sit around a table and understand the entire ecosystem.”

Phakamile Hlubi-Majola, Numsa’s spokesperson, has said that asking for an inflation-linked increase is “unrealistic” because its members are struggling to survive.

Representatives for employers’ associations declined to comment as formal wage negotiations have yet to begin.

[Source: BusinessTech & Bloomberg]