As we enter into the annual Strike Season, with wage negotiations now either already under-way or starting shortly, it may be necessary to reflect on the harsh realities faced by business in the current economic climate.

With the ongoing conflict between Russia and the Ukraine, global food shortages have resulted in significant inflation with a single 2l bottle of Sunflower Oil nearing the R 400.00 mark and several countries restricting the export of cooking oil products. This in turn has a knock-on effect on other food items and overall results in significant inflation in the basket of consumer goods.

Paired with an unprecedented increase in fuel costs despite temporary relief measures by Government, we are seeing huge increases in living costs for Employees. The decision by Government to increase the Prime Lending Rate by 50 basis points will also see debt instruments increasing.

While it is easy to sympathize with Employees, the effect on business, only beginning to recover from the impact of COVID-19 is also staggering and Employers are struggling to find the means to offer increases that could even match CPI.

With the April 2022 CPI of 5.9%, 1.4% higher than the historic average of 4.5%, businesses are not well positioned to offer increases at this rate, with several Employers who were polled having only prepared a budget of 5.25%. Measured across the fact that Sibanye stood fast at a significantly higher 6% which was rejected and resulted in a three (3) month strike by its Employees, it is clear that Organized Labour is not going to accept offers that are affordable for business.

From the numbers we are currently seeing, it appears that Organized Labour will be pushing for increases in the 9% – 15% region which are simply not attainable. Employers should therefore brace themselves for an incredibly difficult year in wage negotiations.