[miningmx.com] – IT’S a pity the Chamber of Mines’s (CoM’s) notion of a social compact as a framework for negotiating wage increases in the gold sector wasn’t first tabled with unions at one of the MIGDETT meetings.
Unions attend MIGDETT meetings and so does the South African government which could surely be apprised of the fact that an increase in electricity tariffs and a reasonable lift in gold industry wages is an either/or situation because the gold sector can’t afford both.
According to industry sources, the average operating margin for the gold sector in this country is about 3%. Given that labour costs are still roughly 50% of total costs, and accounting for the fact that the bargaining categories represented by the unions don’t make up all of that 50%, an inflation-related wage increase would roughly mean South Africa’s gold sector breaks-even, on average.
A 25% increase in the electricity tariff every year, however, breaks the bank. It would seem the CoM isn’t crying wolf when it says the mining sector, and gold in particular, is at a tipping point: tipping into the rubbish heap.
If wage talks, the first three days of which was completed on June 24, end up in a strike longer than a month, then Harmony Gold is in serious danger of complete collapse.
That’s an uncomfortable thought for Government which said last month a MIGDETT generated task team was looking into ways to minimise retrenchments.
Well it might as well start with the tariff application. If job retention is a serious goal of the Government, it can then set about recapitalising Eskom itself rather than asking industry and consumers to do it.
In any event, Brian Molefe, acting CEO of Eskom, has privately set down plans to issue bonds and call on loan agreements with the likes of the World Bank in the event the National Energy Regulator of South Africa turns down the tariff application.
As for the gold wage talks, one feels somewhat afraid. Gold industry CEOs frequently warn this reporter, and others no doubt, not to take union public utterances at face value.
They believe the National Union of Mineworkers and the Association of Mineworkers & Construction Union love to grandstand, taking unwinnable but hostile public positions as a way of painting the mining sector into a corner.
That’s quite believeable.
But it wasn’t hard to feel slightly depressed when newly elected NUM general-secretary, David Sipunzi, told broadcast journalists at the end of the second day of wage talks this week that trust in employers had already ebbed after they had erred in claiming to have paid unions a 10% wage increase in 2013.
The increase was actually 8%. The CoM reportedly claimed its error was in “good faith’ but Sipunzi seemed to feel it was a fatal flaw, a worryingly intractable position even before talks had begun.
He also said that even if unions accepted a inflation related wage increase, there would still be retrenchments. “Retrenchments are part of this industry’s life,’ he said with not a small amount of fatalism.
But the worst of it was that he told journalists that the CoM’s notion of a social compact was something he would contemplate provided it didn’t “become a stumbling block’. The priority, he said, was for employers to pay the money.
Unfortunately, the social compact is the CoM’s position, not a fancy add-on. It wants unions to accept that they too are “of’ the industry, and not “above it’. That, too, might have been a notion better aired at MIGDETT away from the petri-dish that is biennial wage talks where fear of failure makes all sides inflexible.
