South Africa’s gold producers made an opening offer on Thursday of a 5% wage increase, which was rejected by workers who threatened to strike.
Mine workers had demanded a 15% pay rise.
The National Union of Mineworkers (NUM) general secretary, Frans Baleni, said in a statement the offer was an ”insult” to workers.
”If they continue with this dilly-dallying then we have no choice but to call an indefinite strike action,” he said.
The Chamber of Mines, which negotiates on behalf of the country’s gold producers, said its opening offer took into account the country’s inflation rate and the need to control costs and ensure the long-term survival of their industry.
Wage talks in South Africa’s gold sector are watched closely by markets because there is a chance of disruption in output should workers go on strike.
Investors are worried that the NUM, which backed the ANC in its landmark election victory last month, has become emboldened and could strike to pressure gold firms to meet their demands.
The NUM says it wants to shield its members’ earnings from inflation, and argues that its demand for increases nearly double the inflation rate of 8,5% can be met because the price of gold has risen despite the global economic downturn.
A new wage deal is due to start in July 2009 for two years.
Elize Strydom, the Chamber of Mines gold sector negotiator, said gold production in South Africa was dwindling due to maturing mines, forcing gold producers to dig even deeper to find gold-bearing ore, adding to production costs.
She said that apart from the demand for higher wages, unions wanted improved medical cover and higher allowances for workers living outside company hostels, which were unbearable.
”Our opening offer is a 5% wage rise,” Strydom said.
”If you add up all the other demands to the wage increase demand, it leads to roughly a 28% increase in total.”
The least paid mine worker in South Africa’s gold sector earns about R3 000, she said.
Wage hikes are likely to boost production costs, already about half of total costs for gold producers, who sell their gold for dollars and pay costs in the local rand currency.
Strydom was negotiating on behalf of AngloGold Ashanti, Gold Fields and Harmony, the world’s third, fourth and fifth biggest producers respectively.
She said the parties would meet again on June 3, but the NUM said it would have decided by then whether to call a strike.
The traditionally white Solidarity union urged gold producers to re-consider their position, citing the gold price.
”Gold has performed very well over the past year. From March 2008 to March 2009, it rose by 51% in rand terms,” Solidarity spokesperson Jaco Kleynhans said in a statement. — Reuters