Unions reject 4% wage offer from gold producers

South African trade unions representing gold mining employees dismissed a proposal to increase wages by 4%, increasing the prospects of a further deterioration in labour relations.

“We totally reject it,” Lesiba Seshoka, a spokesperson for the National Union of Mineworkers (NUM), which represents 64% of gold mining employees, said by telephone on Monday. “The chamber is setting the scene for confrontation.”

The Chamber of Mines, which negotiates on behalf of gold mining companies including AngloGold Ashanti and Sibanye Gold, offered employees a 4% rise in basic pay and housing allowances that would bring guaranteed wages for entry-level workers to R8 900 ($900) per month.

Labour groups and the chamber will reconvene on July 24th to discuss the offer, which is below South Africa’s 5.6% inflation rate.

“In terms of the spirit of negotiation to find a solution, this is not an offer that we can take to our members,” said Franz Stehring, head of mining at trade union Uasa, which represents 6.9% of gold miners.

The Association of Mineworkers and Construction Union (Amcu), which represents 17.2% of employees, is awaiting a better offer, general secretary Jeff Mphahlele said by phone.

Wage increases demanded
Amcu demanded that underground workers’ pay should be more than doubled with a minimum entry-level salary of R12 500 a month. The NUM is asking for wage increases of as much as 61%.

The consequences of companies acceding to the unions’ demands would be “dire”, Elize Strydom, chief negotiator at the Chamber of Mines, said on a call with reporters. “The future of the industry is at stake.”

The gold price has dropped 32% from its high of $1 900 per ounce in September 2011, including a record three-month fall in the second quarter. About 60% of gold mining operations are unprofitable at the current gold price of $1  285 per ounce with the figure increasing to 100% if capital expenditure is included, Strydom said.

“We need to do what we need to do to be responsible, be good leaders, look after our industry, and look after our employees’ best interests,” she said. “The offer we made was never meant to be confrontational.” – Bloomberg

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