Mother of all showdowns looms in gold mining wage talks

A dramatic showdown is imminent in the gold mining sector as unions have vowed not to back down from a double-digit percentage wage increase. This while an industry analyst has warned the sector is on its last legs and job losses are on the cards if wages were hiked by anything above 5%.

Wage negotiations kicked off yesterday in Boksburg, with unions putting up a united front in terms of their demand of no less than a 10% wage increase. The National Union of Mineworkers (NUM) wanted a two-year agreement for a R10 500 salary for workers underground and R9 500 for workers above ground among such additions as housing allowances.

The union’s general secretary, David Sipunzi told The Citizen yesterday that while it was aware of market strain in the industry, it would go on strike should employers stop at anything less than a 10% increase.

Employers have yet to put a number on the table and are expected to do so next Wednesday, when negotiations are set to resume.

Mining and investment analyst Peter Major, however, has warned that unions will be under pressure to settle for a rather modest wage hike this time around.

“This is probably going to be the most important wage negotiation in almost 30 years because for the first time the industry has started to crack the window into what’s really going on, and now the unions will have to be honest that they know the industry is really in a jam.

“I think the unions are still going to push hard, like they did with Eskom, but eventually they are going to have to be realistic. Shareholders have had enough and government is not likely to do anything about it because they’re worried about elections.”

He believes employers are likely unable to afford anything more than a 5% wage increase.

David van Wyk, the lead researcher at The Benchmarks Foundation, argued both unions and employers were more likely to settle for 7%. He posited that the gold mining industry was in a state of transition and attitudes about equitable remuneration had to change.

With the larger companies like Anglo American selling off mines and giving way to smaller prospectors, wages were no longer the only area of change unions could look at for sustainability.

Van Wyk was sceptical of the notion that gold miners were under remarkable financial strain and that the industry was on the cusp, saying various international and local factors were at play.

“Seven years ago, gold was trading at $400 an ounce and it is now trading at $1 200. If you take into consideration that the rand/ dollar exchange [rate] is now close to R20 … mining companies are paying high operation costs locally because they are paying in rands, meaning the cost of mining has declined, and they are selling gold in dollars. Also if you look at 80% of companies in the country, they are not recording a profit so they are not paying any taxes.”

Van Wyk qualified that the industry was ripe for change, saying both unions and employers should take a page out of Switzerland’s transport industry and offer unions ownership in order to earn dividends rather than just wages.

The industry was moving away from major monopolies such as Anglo American and into smaller mining companies. But this transition needed to be aided by government regulation, legislation and the Mining Charter.

“I doubt the unions will strike,” Van Wyk said, adding that if they did, it might push gold prices further up, an unintended benefit for the industry.

“But no one in the industry will tell you that”, he quipped.

– simnikiweh@citizen.co.za

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