/ 9 July 2015

Lessons in wages from Marikana

Wage negotiations in the gold mining sector are getting heated
Wage negotiations in the gold mining sector are getting heated

Mining houses are offering workers wage deals that differ from company to company, but one trade union has warned that this strategy was one trigger that led to the Marikana massacre.

Employers argue that one size will not fit all when it comes to settling on a wage agreement in the embattled gold industry because of the economic realities facing each mine.

Trade union Solidarity said differentiating wage agreements for each company was not only complicated but dangerous. And this week the Association of Mineworkers and Construction Union (Amcu) declared a deadlock.

The basic wage offer for underground workers ranges from annual increases of 7.8% (R450) for Harmony, 11.1% (R625) for Sibanye Gold to 13% (R750) for AngloGold Ashanti. In the case of skilled workers, miners, artisans and officials, the offers range from 4.5% for Harmony, 5% for Sibanye Gold and 6% for AngloGold Ashanti. Benefits and extras such as overtime, insiders say, may even vary from shaft to shaft.

Employers said the various offers were about sustaining the industry. Solidarity said this kind of collective bargaining was a major cause of the Lonmin strikes that culminated in the deaths of 34 people at Marikana on August 16 2012. [See “Piecemeal appeasement had devastating consequences” below.]

Solidarity secretary general Gideon du Plessis said two-tiered bargaining, where the offers to skilled and semi-skilled workers are split, “creates tension amongst [these] categories and that’s dangerous”.

The union, which represents mostly skilled workers, added that the Chamber of Mine’s differentiated salary increase offer would evidently mean the lowest increase for the union’s members in the categories of miners, artisans and officials. It created the impression that increases in the other categories were subsidised by Solidarity’s members’ category.

Peter Major, a mining analyst at Cadiz Corporate Solutions, argued the only way to properly run a business was with differentiated pay.

Iron Curtain
Collectivisation is dead, he said, “but our government is run by people who don’t know the Iron Curtain fell 25 years ago after 70 years of complete disaster. That is why all our gold mines are now irreparably damaged and will all be closed in four or five years.”

Being paid a different wage for a similar job at a different mine – or for a different job at the same mine – was the norm in any capitalist society, according to Major. Housing, promotions and medical and other benefits at one company might make up for a lower wage at another.

“That is what democracy, meritocracy and efficiency and fairness is all about – that you can quit and walk across to any mine you want, whenever you want … [but] nowadays the unions and tripartite alliance tells you what you can and can’t do.”

Joe Mothibi, director of employment and labour law at Norton Rose Fulbright, said collective bargaining, in its most common form, takes place at a company level. It is simply a collective of labour negotiating with a collective of capital.

Centralised bargaining is what is happening in the current gold wage discussions, where a number of players negotiate an agreement.

In some jurisdictions, multicompany bargaining, such as that in the gold industry, is considered unfair labour practice as it can have many uncompetitive outcomes. Some jurisdictions might prefer bargaining units negotiating with the company for workers at different levels because centralised bargaining focuses on the majority union’s needs, often overlooking smaller parties.

Decentralised bargaining
In South Africa, bargaining councils have not yielded the best results for workers. According to the Labour Research Service’s Bargaining Monitor published in March 2013, decentralised bargaining shows the highest (median) minimum wage rate, while sectoral determinations show the lowest. Bargaining councils are somewhere in between – more than R1 000 higher than sectoral determinations but at least R650 a month lower than decentralised bargaining agreements.

“This should not be taken to mean that decentralised bargaining is better than bargaining councils. Decentralised bargaining does allow for better outcomes when a company is large and profitable and organisation is strong, but it also allows for low wage outcomes when a company is small and unprofitable and organisation is weak,” the monitor said.

The department of labour shows the number of bargaining councils has dropped from 80 in 1995 to 45 in 2013. The number of trade unions has also reduced over the same period from 248 to 188.

An industry source said the differentiating wage offers were a step in the right direction: “[In the past], the deal reached is often the lowest common denominator and many of the companies are often smiling all the way to the bank because they are paying wages that the least profitable mine can afford.

For the unions, it takes a lot of sophistication and organisation to negotiate at company level. I think it is genuinely difficult for them to do so in South Africa … It is much easier to negotiate in one place, once every three years.”

Elize Strydom, chief negotiator for the Chamber of Mines, said the companies still found value in having a collective and centralised response to wage demands. “We’ve been doing it for years; we are comfortable with that process. It’s stood us in good stead.”

One company has abandoned the centralised process. Goldfields, which unbundled all but one South African mine in 2012, this time came to a separate three-year wage deal with employees.

Its South African operation, South Deep, is the only fully mechanised gold mining operation in the country and has about 3 500 skilled workers.

Highest first offer
Strydom said the move from positional bargaining (holding on to a fixed position) means the offer extended was the highest first offer the chamber has made in wage negotiations and that it is better than the wage negotiations settlement for the public sector, which negotiated a three-year wage deal with a hike of 7% this year, and inflation plus 1% in each of the two years that follow.

It remains a far cry from the unions’ initial demands. The National Union of Mineworkers demanded a wage increase of 80% for entry-level workers and an extra R1 000 for their living-out allowance. Amcu sought increases of between R6 500 and R7 000 for workers. The United Association of South Africa wanted entry-level workers to have basic salaries of R10 000 and eyed a 15% increase for other categories. Solidarity asked for a 12% wage increase and is lobbying for the retirement age for all employees to be extended from 60 to 63.

Mothibi noted a further stumbling block in reaching sustainable agreement – the competition among unions that cannot agree on membership numbers in the gold sector.

“Amcu’s emergence and its actions in the platinum industry have put the NUM on the back foot. The NUM was accused of having lost touch with the shop floor – this is a way for them to say ‘we’re still relevant and still have your interest at heart’.”

On Wednesday, Amcu referred a dispute over membership numbers to the Commission for Conciliation, Mediation and Arbitration, but won’t return to Monday’s negotiations.

Although small, Solidarity threatened action if its demands are not met. This included reporting alleged noncompliance with the security regulations of mines to the department of mineral resources, and it would consider filing business rescue applications against mining houses should they plead poverty during negotiations.

This follows a recent case when the National Union of Metalworkers of South Africa became the first union to force a company into business rescue (See Numsa forces company ito rescue). Du Plessis described it as “a powerful tool that will be utilised more frequently”.

Piecemeal appeasement had devastating consequences

In the 600-plus-page report from the Farlam commission of inquiry, it is acknowledged that both the strike of the rock drill operators at Impala Platinum and the one that followed it at Lonmin in 2012 were characterised by demands that fell outside the collective bargaining structures.

As detailed in the report, the National Union of Mineworkers, the majority union at the time, had a wage agreement in place with Impala, which ran from 2011 to 2013, and would not reopen talks despite pressing demands made by some of its members in 2012. The report said the union had incorrectly told workers this would be a breach of the agreement.

Pressure from one category of skilled workers, known as the miners, resulted in Impala unilaterally giving them a 18% wage increase. This prompted the rock drill operators, who in good faith had relaxed their demands in the past wage negotiations in the belief that the company could not afford them, to demand a hike too.

When these demands were not met, a violent strike ensued, eventually forcing the company to grant various increases to its entire workforce.

The rock drill operators were then promoted, which resulted in an overall increase in their salaries, including a holiday leave allowance, a living out allowance and a retirement contribution, raising their total guaranteed pay of R6 540 to a total guaranteed pay of R9 991 with effect from April 1 2012.

These increases meant the wages of rock drill operators at Lonmin were lagging behind their colleagues at Impala. This resulted in wage demands taking place outside the formal wage agreement and led to a violent strike. – Lisa Steyn