Lack of trust hobbles gold mine wage talks

Gold mining companies have implored labour to move away from adversarial posturing and approach this year’s wage negotiations differently. But after three days of lengthy negotiations, distrustful unions are yet to understand what exactly the industry has to offer.

Wage discussions started this week with five mining houses and four unions, all of which are holding on to the hope that a deal can be struck without a strike. On Tuesday and Wednesday the companies, which collectively employ 94 000 people, proposed a move away from positional bargaining and proposed an “economic and social sustainability compact” for the mature gold industry in South Africa.

A presentation on the compact, of which the Mail & Guardian has a copy, was circulated to the representative unions last week. In it, the mining companies emphasise the dire state of the industry and the need to preserve jobs.

They explain that the compact would entail “sharing the pain” and “sharing the gain”, and would encompass seven components: jobs, pay, housing and accommodation, debt management, retirement savings, health and wellness, education and skills development.

The presentation emphasises the value of pension savings, showing that a rock drill operator who received a 5% annual increase on guaranteed pay could see pension savings grow from R370 000 to R680 000 over the next decade.

The companies in question are AngloGold Ashanti, Evander Gold Mines, Harmony, Sibanye Gold and Village Main Reef. The unions involved are the National Union of Mineworkers (NUM), the Association of Mineworkers and Construction Union (Amcu), the United Association of South Africa (Uasa) and Solidarity.

Broad principles
Labour representatives canvassed by the M&G said the negotiations provided no further practical details and only the broad principles of the compact were discussed – that is, to come to a sustainable agreement in the light of a dwindling industry.

The NUM, which the mining companies recognise as the union with the largest membership, wants a wage increase of 80% for entry-level workers and an extra R1 000 for the living-out allowance. Amcu is seeking increases of between R6 500 and R7 000 for workers. Uasa wants entry-level workers to have basic salaries of R10 000 and is eyeing a 15% (negotiable) increase for other categories of workers. Solidarity, which typically represents more highly skilled employees, asked for a 12% wage increase and is lobbying for the retirement age for all workers to be extended from 60 to 63.

Solidarity has indicated that, in principle, it supports the holistic but “vague” approach the Chamber of Mines is championing, and believes its own demands are in line with the compact and its emphasis on sustainability.

Solidarity general secretary Gideon du Plessis did indicate, however, that the proposed compact could be disempowering for labour because the mining companies may look at implementing variable total remuneration (although not wages). This would depend on the performance of each mining house or even each shaft, “and any variable pay model has never been successful”, Du Plessis said.

Franz Stehring, Uasa’s divisional manager responsible for mining industry workers, also expressed concern over variable pay. “Is it going to be shaft by shaft, mining house by mining house?” he asked. “In the past we have received differentiated offers, but at the end of the day we got to a deal that suited everyone. Workers shouldn’t be penalised because they work at a specific shaft.”

Du Plessis said the companies’ proposal includes a profit-share scheme and a “share in pain” mechanism, ‘which means less working hours, less shifts, no overtime. So you end up with a reduction in remuneration to contain overhead costs.”

The upside, he said, is that these measures may come with a guaranteed moratorium on retrenchment.

Sector stability
While employers are hoping for a five-year wage offer to bring some stability to the sector, “it all depends on the offer. If the offer is fair, we will consider an extension,” Du Plessis said.

Stehring said that, after the principles of the compact were outlined, unions became anxious for an offer. “For all practical purposes, organised labour said: ‘We hear what you say. Give us an offer – we can’t entertain the document without an offer. Come forward and give us something so we can see what you mean.'”

The presentation identifies production and the rand/gold price as the two factors that determine revenue. Production can be influenced but the companies have no control over the metal price, which has been flat for two years. A third of the gold sector’s jobs have been lost in the past decade, and jobs lost are hardly ever recovered, the document notes. Each employee provides for up to 10 dependants and each direct job in the sector creates two indirect jobs.

Some costs, such as employment benefits, can be controlled; others, such as electricity, cannot.

But negotiations hit a speed bump on Wednesday when the chamber presented these and other financials to illustrate the state of the industry and claimed labour costs increased by 10% in 2013 despite an 8% wage hike being agreed on.

“The negotiations stalled because of the lies the chamber was trying to convey,” NUM spokesperson Livhuwani Mammburu said. “They said the mistake [that the settlement was 10%] they made was in good faith, on which we disagree: it was not a mistake in good faith. It is going to be very difficult to trust them.”

‘A lot of havoc’
NUM general secretary David Sipunzi said: “That issue has caused a lot of havoc here because we don’t trust anything that they give to us any more.”

Because the compact proposes that overall remuneration will be based on factors such as the gold price and interest rates, trust is an important element, Du Plessis said. “Now every time there is an issue, we are going to ask: How can we trust [the mining companies] with providing accurate figures?”

Unions will now approach the various companies to verify the figures relevant to the negotiations. But it is hoped that the focus will shift back to the demands and details of the proposal when the parties reconvene.

Sipunzi said the NUM does not want the compact to be a stumbling block to negotiations.

Gold Fields is not part of the collective bargaining this year and has already signed a wage deal, effective April 1, with the registered trade unions at its South Deep mine – the only operation it has left in South Africa after unbundling in 2012.

“The negotiations took place at a company level in recognition of South Deep’s significantly different operating model and labour profile to that of the other gold mining companies in South Africa,” the company said in April.

‘Skilled’ employees
“South Deep is the only fully mechanised gold mining operation in South Africa and it employs a small, skilled complement of approximately 3 500 employees.

As such, Gold Fields has had to give due consideration to the scarcity of mechanised mining skills in South Africa and has taken a holistic approach in its negotiations with labour.”

The chamber said that, when negotiations reconvene on Monday, the mines plan to table an offer on wages and benefits within the principles of the proposed social compact.

The current wage agreement in the gold mining sector expires at the end of June and the new agreement, when it is reached, will be effective from July. Amcu could not be reached for comment.

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