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Peterson Lengana and hundreds of his co-workers are bracing for the loss of their jobs at the Limpopo platinum mine in South Africa’s resource-rich north. They want the government to cushion the blow.

“Where will we find new jobs?” said Lengana, 37, who has worked at the mine for five years and supports his parents, his wife and his two children. “There’s no way we can find other jobs. Our government must stop this.”

Owner Lonmin Plc says the mine may close now that platinum prices have fallen by two thirds since March. Coupled with job losses in the car and banking industries, the cuts may push up an unemployment rate of 23 percent at a time when the nation’s leadership is in flux.

South Africa, supplier of four-fifths of the world’s platinum and most of the coal for European Union power plants, is being hurt by a slide in demand for commodities. The slump is increasing pressure on the ruling African National Congress and its presidential candidate in next year’s election, Jacob Zuma, to abandon the fiscal restraint that’s helped underpin a decade of economic growth and led to budget surpluses.

Africa’s biggest economy has the highest jobless rate of 61 countries tracked by Bloomberg, 14 years after the end of apartheid. Forty-one percent of the population earns less than 367 rand ($35.50) a month.

ANC Split

The Limpopo mine is near the town of Polokwane, where trade unions and the Communist Party last year ousted Thabo Mbeki as ANC leader and replaced him with Zuma. Standard & Poor’s said this month it would review the country’s credit rating once it saw the plans of the new government.

The ratings company said it was concerned that economic policy may shift away from the “fiscal restraint” that has underpinned South Africa’s BBB+ rating.

“When poverty spreads quickly, the temptation is always there to gerrymander the system,” said Nic Borain, a Cape Town- based political analyst for HSBC Holdings Plc. “They will be tempted to do more for the poor or impose a more interventionist policy.”

Zuma, 66, denies he will spend his way out of the economic slowdown forecast for next year. “The government will look at programs and priorities, realizing that there are constraints,” he said in an interview in New York on Oct. 24.

Influence

Mbeki, 66, who oversaw the longest period of economic expansion on record, was ousted by the ANC as the country’s president on Sept. 20 after a court indicated he may have pressured prosecutors to file corruption charges against Zuma. He was replaced by ANC deputy president Kgalema Motlanthe.

Elections must be held by July next year and the ANC will probably face a challenge from a breakaway party of Mbeki supporters called Congress of the People cheap car insurance.

The Congress of South African Trade Unions is pushing the government to abandon its inflation-targeting policy, blaming the central bank for pushing up interest rates and undermining job creation. It has also called for the introduction of a guaranteed minimum income, a plan rejected by Finance Minister Trevor Manuel as too costly. The grant is being discussed by the ANC for inclusion in its election manifesto.

Manuel, who has guided fiscal policy for 12 years, said on Oct. 22 he has been in the position for too long and has discussed his future with ANC leaders.

Looming Deficit

The government will move to a budget deficit in the next fiscal year after two consecutive surpluses as the global financial crisis cuts economic growth and spending rises to upgrade the power supply, roads and ports. The shortfall will reach 1.6 percent of gross domestic product in the year through March 2010, the government says.

Lonmin said on Nov. 18 it may close the “uneconomic” Limpopo mine in the northern province bordering Zimbabwe, putting 1,500 people out of work. The company may slash more than 6,000 jobs in South Africa.

“Our estimate is that one mineworker financially supports eight other people,” said Jaco Kleynhans, spokesman for the Solidarity labor union, which represents 700 workers at Lonmin. “The effect on the community is therefore huge.”

Limpopo and other closures will push the government’s target of slashing the unemployment rate to 14 percent by 2014 out of reach. It may also reverse gains in poverty reduction.

The government said on Dec. 4 it will set up a task team with labor unions and businesses to help “minimize job losses” and ease the impact of the global financial crisis on the economy.

For unskilled workers, finding another job is almost impossible. About 60 percent of those who were unemployed in September, or 1.7 million people, hadn’t had jobs for more than a year, according to Statistics South Africa.

“I’ve been looking for a job since 2006,” said Kentus Ramovha, 27, who didn’t finish school and hasn’t had full-time employment since working at a spice factory in Johannesburg. “I go to houses, to factories, to garages — any job they’ll give me, I’ll do. But there’s nothing for me. I feel very angry. Why can’t the government do something?”

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Filed under: economics by Wolf