SA gold wage deal was bitter-sweet: Venkat

[miningmx.com] – THE South African gold mining industry did not achieve its stated aim of negotiating a compact agreement for its sustainable future with organised labour in the 2015 wage negotiations.

That’s the blunt assessment from Anglogold Ashanti CEO, Srinivasan Venkatakrishnan (Venkat), although he added that “… at the same time we did not come away with nothing either”.

“There were a number of plusses which include the fact that we secured a three-year wage agreement for the first time in the industry in my memory.

“Much of the settlement is predicated on the industry getting back on its two feet and improving productivity. It has opened up dialogue with government on other related interruptions that come into business such as safety-related stoppages and how they can be better applied,” he said.

“So, it’s not a case of losing outright. There were quite a few wins, but we certainly did not get what we had wanted in an ideal world. What we have got is not a bad position to be in.”

Yet the agreements reached with the unions in October fall well short of what Venkat and other industry executives such as Harmony CEO, Graham Briggs, said they required going into the negotiations.

Venkat told Miningmx in May: “What we cannot have is year-on-year discussions without any economic consequences. That dialogue has to change. There is a trade-off between wage increases and employment numbers and we want to bring that into the dialogue up-front.

“This has been an issue for quite a while and what we have seen is a paradigm shift in terms of South African operating costs.”

In August, Briggs commented: “This is not just a positional bargaining issue. It’s an affordability issue. Our ability to pay is just not there.”

Yet the final settlements reached were for increases of between 10% and 13% in basic wages for entry-level employees in each of the three years of the agreement compared with the South African inflation rate which has averaged 4.5% so far this year.

Harmony estimated the average wage increase on its total South African wage bill at about 6.5% for its 2016 financial year.

No agreement was struck linking pay to productivity which is something the gold producers have been trying to negotiate with the unions for more than a decade without success.

Significantly, the agreement is with only three of the four main unions – the National Union of Mineworkers, Solidarity and UASA – with the hard-line Association of Mineworkers and Construction Union (AMCU) holding out which has raised the possibility of strike action still to come in 2016.

Said Venkat:”The above CPI increases are predicated on productivity improving to claw back the above CPI increase and I think that needs to happen.

“The compact has not been completely thrown out. What we have agreed with the unions is that over the three year period we will look at working together to see if we can come up with a compact and secondly to look at shift arrangements; working hours and the like to maximise the position at the rock face.

“Thirdly, this is where the government also comes in in terms of any help it can provide in managing the interruptions which we otherwise have at the mines.”

AMCU is understood to be waiting for the outcome of its appeal to the Labour Court over the gold mining companies’ action in applying the wage increases across the board in the 2013 wage settlement before deciding on a course of action.

Asked about this Venkat said: “The Labour Court ruling (in June 2014) went in our favour on that issue. We are confident that the Labour Appeal court will also see the merits of this argument.

“I think it’s best to leave it at that. If there is a court ruling I think the unions will respect it because the consequences of not respecting it are well known. I presume at that stage common sense will prevail.”