South Africa Gold Mines And Workers: Battle Looms Over Wages

South Africa Gold Mines And Workers: Battle Looms Over Wages

From Reuters

If South Africa’s gold miners strike over wages next week, the loss of output will drag down companies already being crushed between rising costs and falling prices for the metal.

The strikers, seeking better pay and conditions for one of the toughest jobs in the world, may also be putting their own livelihoods on the line if a protracted stoppage or the scale of their wage demands force some mines to close.

This live-or-die dilemma hangs equally over boardrooms, mining shafts and communities in an industry which could lose over $35 million a day in output due to stoppages, and also slow already sluggish growth in Africa’s biggest economy.

The National Union of Mineworkers (NUM) has threatened to downs tools next week over wages, a move that would effectively shut a gold sector already in a state of steep decline.

Johannesburg’s index of gold producing companies has lost 62 percent since a life high reached in September 2002, and 42 percent so far this year.

South Africa’s overwhelmingly black mining work force is in a restive mood as it fights for a greater share of the spoils from an industry built on low wages and migrant labour.

But it has reached a point where soaring costs and falling prices have made big pay rises unsustainable. As production has fallen the industry has shed 340,000 jobs since 1990, over two thirds, and more will need to be slashed if wages, which have outpaced inflation the past decade, spiral higher.

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The numbers just don’t add up at a time when gold’s spot price has lost close to 30 percent from the record peak of over $1,920 an ounce it scaled almost two years ago.

NUM, which represents two-thirds of South Africa’s gold miners, is seeking a 60 percent wage hike for entry-level workers and 15 percent for all other categories.

Its more hardline rival the Association of Mineworkers and Construction Union (AMCU) wants increases of up to 150 percent at the entry-level but is still in talks with the companies.

The country’s chamber of mines says about half of the lower-skilled gold mining workforce of 95,000 would fall into the entry-level category.

Currently, such workers are making 5,000 rand ($490) a month as a basic wage and NUM wants 8,000. So that demand alone would add 142.5 million rand to the industry’s monthly wage bill.

In addition to the basic wage, the chamber of mines says that in the gold sector there are other benefits which can translate into a total of 8,800 rand a month in costs to a company. These include meals, housing, and other allowances.

NUM also wants various increases for non-wage benefits as well a 15 percent hike on basic pay for all worker categories.

Read more at Reuters.