UPDATE: Wage Agreement Ends South African Transport Strike

A nearly three-week strike that had paralyzed South African ports and freight rail was called off Thursday after members of another labor union signed up to a new pay agreement.

State-owned Transnet Ltd. said it has signed the pact with the South African Transport & Allied Workers' Union after agreeing to a one-off payment equal to 1% of workers' wages. The payment is on top of a package including an 11% wage rise and will also be given to members of the United Trade & Allied Trade Union, which agreed to the pay deal last Friday.

The strike had threatened to cast a cloud over the soccer World Cup, which kicks off June 11 and is expected to draw more than 300,000 visitors to the country.

A separate strike at state power company Eskom Holdings Ltd. was called off this week, but South Africa's biggest labor federation has warned of a "massive strike" if the government doesn't review sharp increases in electricity prices.

"The key priority now is to work on the recovery plan to ensure that all the backlogs that have built up are cleared as quickly as possible," said Chris Wells, acting chief executive officer of Transnet.

Striking members of Satawu are due to begin returning to their jobs from Friday morning, he said.

Among other benefits, the wage agreement will lift the minimum wage to 50,000 rand ($6,418) a year from ZAR38,000.

"We have demonstrated our muscle. Our members have won significant improvements," Satawu said, adding it would continue to press for a reinstatement of a housing allowance and increased maternity leave not agreed in the new deal.

The strike that began May 10 has hit exports of automobiles, fruit, wine and metals. Companies including ArcelorMittal South Africa Ltd. (ACL.JO) and Kumba Iron Ore Ltd. (KIO.JO) had warned customers they wouldn't meet contractual supply agreements.

Business Unity South Africa said estimates from its members across industries suggest every two weeks of the strike was costing the national economy ZAR7 billion. The fruit industry alone is estimated to have lost ZAR1 billion, the government said.

The National Union of Mineworkers this week called off a planned strike against Eskom after the state power utility was granted a court order that would have made a walkout illegal. A clash with the union still seems likely after it Thursday rejected an offer of a 3% wage increase, well short of the 18% demanded.

The Congress of South African Trade Unions, an umbrella organization that represents unions including the NUM and Satawu, warned it could launch a nationwide strike if progress isn't made in its demand that the government review a decision allowing Eskom to raise electricity prices almost 25% a year for three years. It has said the increases will cost jobs and derail South Africa's economic recovery, and alternative revenue sources for Eskom should be found instead.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]