The National Employers’ Association of South Africa (NEASA) issued a stark warning today, stating that the country’s steel and engineering sectors are facing a severe crisis, with tens of thousands of jobs lost due to a combination of high wage costs, tough economic conditions, and problematic government policies.
Over the past six years, NEASA’s membership has plummeted from 1,800 firms to 1,500, a decline that CEO Gerhard Papenfus states has directly cost approximately 10,000 jobs. This trend, he warns, is part of a much larger and more devastating pattern of deindustrialization affecting the entire nation.
In an interview, Papenfus elaborated on the multifaceted crisis. He identified two primary factors driving job losses: the high wage scales enforced by the Metal and Engineering Industries Bargaining Council (MEIBC) and the high cost of raw materials, specifically steel.
According to Papenfus, the MEIBC’s collective bargaining model “favors big business” but has “absolutely hammered the downstream” small and medium enterprises that form the backbone of the engineering sector. He stated that the steel industry is the most expensive in terms of wages, particularly at the entry-level, making it unaffordable for many companies to hire low-skilled workers. He estimated the sector has lost a staggering 200,000 jobs over the last decade and a half.
The second critical issue is the high price of steel, which Papenfus attributes to import duties imposed since 2015 to protect primary steel producer ArcelorMittal South Africa (AMSA). He argued that these duties, which can exceed 50%, have backfired.
“The attempt to protect [AMSA] has killed clients and now it’s come back to bite AMSA,” Papenfus said. “The industry needs affordable raw material… What we need is what the downstream needs is cheap, affordable raw material but protection on the final finished product. The South African government often has that the other way around.”
This policy, he explained, makes South African manufacturers uncompetitive both locally and internationally. While there is a global oversupply of steel, particularly from China, South African manufacturers are prevented from accessing more affordable imported steel, while competitors in other African nations can. This leads to a flood of imported finished products into South Africa, devastating local manufacturing and costing more jobs.
“We are de-industrializing at a huge scale,” Papenfus stated, pointing to the proliferation of import warehouses as evidence that local manufacturing is being replaced.
The conversation highlighted recent major retrenchments, including 3,500 jobs at AMSA’s Vanderbijlpark and Long steel plants, 900 at Goodyear, nearly 500 at Ford Motors, and 3,000 at mining company Glencore, all of which impact the downstream steel and engineering industry.
Papenfus dismissed the idea of state intervention or nationalization as a solution, calling it “the worst possible way to go.” He argued that government protection removes the incentive for companies like AMSA to become efficient and competitive. Instead, he called for a fundamental rethink of industrial policy, focusing on making raw materials affordable and allowing the private sector to drive growth.
The CEO framed the crisis not just as an economic issue, but a socio-political one with the potential for widespread unrest. With youth unemployment near 60%, he warned that denying people the dignity of work creates a “massive problem in a society.”
“The state cannot replace that with a grant. Never,” he said. “The moment you take that away, you create a massive problem in a society… and we already have that problem.”
The interview concluded with a call for urgent and decisive policy shifts to reverse the decline and prevent further catastrophic job losses in one of South Africa’s foundational industries.
