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Unions to blame for labour slump
Garth Theunissen
Posted: Wed, 14 Mar 2007
[miningmx.com] -- SINCE 1984, employment in the mining industry has fallen 43.61%, a fact blamed on everything from increasing mechanisation to the physical reality of resource exhaustion.
What's seldom pointed out, though, is the increase in mineworker remuneration since the early Eighties.
In 1984, the average annual salary of a South African mineworker was a pitiful R5,963.30. By 2005 this had risen to R82,795.92, an increase of over 1,288%. Viewed in that light, the 43.61% decline in employment on South Africa's mines seems almost benign.
Of course, one must also take inflation into account to determine the real increase in remuneration. Given that inflation averaged 9.99% a year between 1984 and 2005, the annual salary of a mineworker would have had to increase to at least R42,645.36 to negate the increased cost of living. In reality, wages increased by almost double that amount.
Then again, reality does tend to be more complex than simple economic models as a host of variables could lie behind the massive increase in mineworker remuneration.
It's likely that the ratio of skilled to unskilled workers has increased since 1984 as mines strove to improve productivity. This would have pushed up the average wage of mineworkers.
 Massive increase in mineworker remuneration  Click on image to enlarge
Again, it appears that increased remuneration could be to blame. In 1984, the average worker on a gold mine earned R5,562.91 a year. By 2005 this had increased to R75,657.96, a 1,260% increase.
If we simply wanted to adjust the 1984 wage for inflation (9.99%), then a gold miner's annual salary should have increased to R39,775.54.
Again, reality is the thorn in the side of this theory. Given that the 1984 wage was extremely low, we had to expect that wages would rise to more equitable levels given the political changes in South Africa.
But setting emotions aside, the cold question is: If unions are responsible for the increase in the average wage, are they also responsible for the decrease in employment?
Independent labour analyst Gavin Brown said this was a reasonable assumption.
"It's certainly no surprise," he said. "As a rule, unionised workers tend to be better paid than non-unionised workers in any sector. This is a natural consequence of collective bargaining."
There's a premium attached to unionisation in that if the price of labour goes up relative to the price of capital, employers will lean towards the capital side of the production mix, he said.
In the gold mining sector this has certainly been a trend, particularly in new mining ventures, which are becoming increasingly capital intensive.
"This is not only due to the cost of labour but also the hassle factor of employing labour," said Brown. "With a machine you know what productivity you're getting, but increased productivity often has to be coaxed out of the unions after a long collective bargaining process."
However, Frans Barker, chief labour negotiator for the SA Chamber of Mines, said no single factor can be blamed for the decrease in employment.
"It's a complex variety of factors that includes the deterioration of the ore body, increased mechanisation as well as increased costs related to accommodation, healthcare and greater social responsibility," he said. "Unionisation has played a role but it's only one slice of the pie."
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