Kumba, union lock horns over wages

Trade union Solidarity and resources company Kumba Resources started the first day of their annual wage negotiations with Kumba tabling an offer of 4%, while Solidarity demanded an increase of 12%, the union said in a statement on Tuesday.

“Kumba’s offer to workers at the bottom levels puts them under the breadline in South Africa,” Solidarity said.

Kumba Resources spokesperson Trevor Arran confirmed that Kumba’s opening wage offer was for a 4% increase.

Labour costs make up 29,1% of the company’s production costs, the union said.

Solidarity motivated its demand for a 12% increase by insisting that workers be compensated for current increases in the cost of living. During wage negotiations the union has started to use its worker inflation measure, which factors in the price increases that workers face directly, rather than CPIX.

CPIX is the measure the South African Reserve Bank uses for inflation targeting and is consumer inflation less the effect of interest on mortgages.

“Employers like to link annual increases to the consumer price index [CPIX]. The problem is, however, that the CPIX applies to the overall economy and does not distinguish between individuals or groups.
There are several factors that need to be considered in conjunction with the CPIX,” Solidarity said.

“It is important to determine worker inflation in calculating fair remuneration. Increased productivity by the workers helped Kumba to achieve success in its cost-cutting measures. The company’s finances are healthy,” the union added.

Iron-ore contract prices increased for the 2005/06 year by 71,5% and the benchmark price for the 2006/07 iron-ore year is for an increase of 19%.

Kumba is the world’s fourth-largest deep-sea exporter of iron ore, which the company exports through the port of Saldanha.

The company is planning expansions with projects such as Sishen South and the GG6 project at Ellisras on the cards.

“Last year Dr Con Fauconnier, CEO of Kumba, received a 35% increase on his basic salary and a 19,8% increase on his overall remuneration package,” said Solidarity spokesperson Reint Dykema.

“This offer by Kumba means that stormy weather lies ahead for the company. It simply cannot be expected of workers to take the company’s offer seriously,” Dykema said.

“Workers in the mining industry have, on average, eight to 11 dependants who rely on their income. It is important that salary increases will take these circumstances into account and ensure that workers enjoy an improvement in their standard of living,” he added.

“If one considers the number of people depending on every single worker, an absolute minimum of R3 000 is needed to survive. Kumba is offering workers at it lowest post levels a minimum of only R2 644, which puts them under the breadline in South Africa,” Dykema said.

Kumba is set to split into Kumba Iron Ore and Exxaro Resources with the two entities to be separately listed on the JSE later in 2006.

The trade unions that are involved in the negotiations are Solidarity, the National Union of Mineworkers and the Black Allied Mining and Construction Workers’ Union.—I-Net Bridge

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