Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso has voiced strong criticism over Transnet’s recent wage increase deal, warning that it sends the wrong message to South African businesses already battling tough economic conditions.
Last week, Transnet agreed to pay its workers a 6% annual wage increase over the next three years, a rate that is double the current inflation and higher than projections for future inflation. This deal follows a strike by militant unions who threatened to bring the country’s logistics network to a halt.
Mavuso described the wage settlement as a clear failure of leadership on both sides. She pointed to unions for holding the country hostage with strike threats and to Transnet’s management for quickly yielding to those demands without pushing back.
“While South African businesses are slashing costs and retrenching workers, Transnet workers will get pay rises double the inflation rate. These increases will be paid for by taxpayers who are already struggling to make ends meet,” Mavuso said.
The timing of the deal also raised concerns as National Treasury recently agreed to provide Transnet with extra guarantees to help manage its heavy debt load.
South Africa’s economic growth is forecast to be weak, around 1.5% for 2025, off an already low base. Many private companies are tightening budgets and trying to save cash just to survive the difficult period. Unfortunately, this means that many workers across various sectors are losing their jobs.
“Yet the unions threatened to shut down the entire logistics system unless their demands were met, showing a blatant disregard for the fragile economy,” Mavuso added.
She pointed out that Transnet itself is a major factor in South Africa’s economic challenges. Poor performance by Transnet in managing rail and port logistics reportedly costs the country about R1 billion every day — an amount equal to the daily budget of a midsize municipality and roughly 5% of South Africa’s GDP.
Mavuso said many unions appear to be stuck in a world that no longer exists — a time 15 years ago when the country enjoyed growth above 5% and the government ran budget surpluses.
Today, the economic reality is very different. Goodyear Tyres recently closed its 78-year-old Eastern Cape plant, resulting in 900 job losses. The mining sector has also seen thousands of retrenchments in the past two years at companies like Sibanye Stillwater, Anglo American Platinum, and Impala Platinum.
“Many of these retrenchments are directly linked to companies struggling to get their products to market,” Mavuso said. She explained that union action at Transnet has contributed to this crisis by disrupting exports due to poor logistics.
She also criticized Transnet’s management for not insisting on performance-linked pay increases. Instead of tying wage hikes to improvements in shipping volumes or service delivery, unions demanded guaranteed increases regardless of how the company performs.
“This creates a toxic dynamic where unions treat the state as an endless ATM. Private sector unions understand that companies must remain viable to protect jobs,” Mavuso added.
The wage agreement also includes additional job security guarantees, limiting Transnet’s ability to restructure or improve performance.
Mavuso stressed that for real change to happen, Transnet needs private sector investment and competition. However, as long as militant unions hold veto power over reforms, South Africa will remain trapped in a cycle of bailouts and underperformance.
She called on National Treasury to impose strict conditions on future bailouts to break the unions’ grip on Transnet. “Treasury must demand performance metrics as tough as those required from any private company receiving bailout funds,” she said. “It should also have the power to override union objections when restructuring is necessary.”
Mavuso’s comments highlight the tension between workers’ rights and economic sustainability in South Africa’s struggling economy, underscoring the urgent need for balanced reforms in state-owned enterprises like Transnet.
