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Published: Tuesday July 1, 2014 MYT 8:15:02 AM
Updated: Tuesday July 1, 2014 MYT 8:16:03 AM

Looming South Africa engineering strike latest blow to sickly economy

JOHANNESBURG (Reuters) - A strike by more than 220,000 engineering workers, hot on the heels of a crippling platinum boycott which ended last week, will likely keep South Africa's economic growth depressed below 2 percent this year.

Members of the National Union of Metalworkers of South Africa (NUMSA) are due to down tools on Tuesday after last-gasp wage talks failed to yield a deal.

South Africa's largest union said on Monday workers would march in several cities including the commercial capital Johannesburg, Cape Town and Durban.

NUMSA will also picket the headquarters of power utility Eskom on Wednesday to press for a wage increase of 12 percent, nearly double the current inflation rate.

Eskom produces the bulk of electricity in Africa's most developed economy and is deemed an essential service, making strikes illegal.

But NUMSA General Secretary Irvin Jim hinted at the weekend that workers would defy the ban, saying the union might have "no option but to allow our members to liberate themselves".

The strike will likely hit the operations of companies like constructing and engineering firms Murray & Roberts and Aveng Ltd , both involved in building two crucial power stations for Eskom.

FRESH BLOW TO ECONOMY

Auto parts makers such as Dorbyl Ltd , Africa's biggest packaging firm Nampak and power cables maker Reunert could also be affected.

The total turnover of the metals and engineering sector in South Africa is 335 billion rand (£18.4 billion), according to the Steel and Engineering Industries Federation of Southern Africa.

The looming boycott is a fresh blow for the economy, which lurched into a contraction in the first quarter after a five-month platinum strike hit mining output. Mining contributes 5 percent to gross domestic product.

Steel and metals manufacturing directly accounts for about a fifth of the factory sector, and the impact of NUMSA action will probably be stronger than that of the platinum strike, Barclays Africa said in a note.

NUMSA, once a political ally of the ruling African National Congress, fell out with President Jacob Zuma's government over policy differences last year.

The union has around 340,000 members, although only around two-thirds of these are planning to go on strike.

(Reporting by Stella Mapenzauswa and Tiisetso Motsoeneng; Editing by Tom Heneghan)

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