The growing importance of Credit agency rating in the economic indicators for a country
necessitates investigating the impact of various indicators on credit agency ratings. South
Africa is a country which has experienced an increase in prolonged, violent and unprotected
strike action. This study aimed to determine the impact of this labour relations action on the
country s credit ratings over the last 15 years and the consequent related economic factors.
Credit rating agencies do not specifically identify strike actions as a key indicator nor do they
indicate which indicators dictate the outcome of the ratings granted. Twelve indicators were
measured using a quantitative approve of hypothesis and statistical modeling. The study
used the interrelated database of The Department of Labour, The PRS Group, Stats SA and
studies by Hammer, Kogan, & Lejeune as well as the published indicators of Standard &
Poor s, Moodys and Fitch. This study further used the scatter plots and t - tests to determine
the relationship between the indicators and strike action. These were correlated using
Pearson s correlation theory in order to substantiate the findings of the scatter plot and t
test. Strike action was found to have an effect on the ratings granted. Eight of the twelve
indicators correlated negatively with ratings of Standard & Poors indicating that if strike
action increased ratings would downgrade. Strike action plays a fundament role in the
outcome of ratings granted. This is due to the effect strike action has on the driving
indicators. Wages lost during strike action has a 99% correlation with the fluctuation of
ratings granted. Ratings determining interest rates and the amount of foreign direct
investment into South Africa. With the results as indicated, South Africa s government needs
to re-evaluate the significance of strike action as a legal for of resolution and the parameters
dictating it. Alternative means need to be explored that supports the growth of South Africa
for it to transition from a developing country into an advanced economy.
Mini Dissertation (MBA)--University of Pretoria, 2015.