JOHANNESBURG (miningweekly.com) – Striking a balance between workers receiving a living wage in line with the national inflation rate and avoid mass job cuts, owing to cash-strapped mining houses looking to reduce costs, remains a major concern for labour unions and platinum miners as wage negotiations loom.

The current wage agreement, which was reached in 2014, expires on June 30 and any agreements reached during the upcoming wage negotiations will be backdated to July 1.

The previous wage negotiation ignited a five-month-long strike, which cost the sector about R24-billion. The stayaway ended when a three-year deal was struck, in terms of which employees earning a monthly basic salary below R2 500 received a yearly increase of R1 000 a month for the first two years. At Lonmin, the same increase applied to the third year as well; however, Anglo American Platinum and Impala Platinum (Implats) agreed to a R950 a month increase for the third year.

Further, employees earning R12 500 a month or more, or whose basic wage rate reached that amount during the course of the three-year agreement, received an 8% increase for the first two years and 7.5% thereafter.

The platinum miners highlight that their current labour costs amount to between 40% and 50% of total costs. They add that the sector has, since 2014, been facing “. . . relentless cost pressures, with operating costs increasing at rates well above inflation”.

They point out that the productivity of employees has dropped by 49% since 2002, while the cost of labour for every 1 kg of platinum produced has increased by 263% for the same period.

“After capital expenditure, about 80% of platinum operations are not profitable; therefore, at current platinum prices, any further increase in costs will have further negative impacts on the profitability and, ultimately, the viability of the sector,” the platinum miners state.

Implats human resources director Mathias Sithole tells Mining Weekly that balancing higher-than-inflation wage increases – a common theme across many of South Africa’s industries – and job security is always a challenge.

“Wages have become a significant part of our operational costs and, if higher- than-inflation wage increases continue, it will invariably result in job losses.”

However, labour unions the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU) stress that many of their members, particularly those occupying entry-level positions, are living under the breadline, with their financial circumstances having been exacerbated by the increased cost of living, owing to rising inflation.

AMCU president Joseph Mathunjwa and NUM chief negotiator Erick Gcilitshana state that their mission remains securing a living wage for their members.

However, at the time of going to print, an exact figure of what the wage increase would be had not been determined, as the unions were still engaging with their members.

Gcilitshana explains that the NUM would like to see a more comprehensive agreement that includes social benefits like paid leave rates and provident fund contributions, as well as housing and medical aid, being reached this time.

He points out that social benefits provide mineworkers with a long-term financial cushion, while salary increases address only their immediate financial needs.

“We know that South Africa is currently in a difficult situation because of the slow economic growth rate and the declining value of the rand. It is, therefore, important that we apply our minds and be objective . . . [We want] to find a solution [that] takes into consideration the future of the country,” Gcilitshana says.

The platinum miners note that a significant amount of effort has gone into establishing and reinforcing constructive relations with labour unions since the previous wage negotiations.

They add that it is in the best interests of the employers and employees to avoid the significant capital losses of 2014.

“We believe that all multistakeholder strategies incorporated over the years, such as the Presidential framework process, and the National Economic Development and Labour Council talks, convened by Deputy President Cyril Ramaphosa on labour relations and strike action, will continue to bring the parties closer and, ultimately, reduce the possibility of a lengthy strike.”

The miners note that “retrenchments are always a last resort and are implemented only after extensive engagement with all stakeholders, including unions”.

Further, they highlight that the mining and labour legislation of South Africa mandates extensive consultations and the consideration of a broad range of alternatives before retrenching employees.

Sithole points out that Implats has improved its communication with employees since the wage negotiations of 2014. He explains that the company has provided negotiation training for its shop stewards and has also hired external personnel to discuss the current state of the platinum sector and South Africa’s economic climate to better manage wage increase expectations.

“I think this time . . . there is a better appreciation of the state of the industry,” he notes.

Implats has provided financial literacy education through a programme called Team Mobilisation, which teaches employees how to budget properly and read contracts, as many of the employees are heavily indebted, owing to irresponsible lending practices by some moneylenders.

“I believe that these initiatives will help this year’s negotiations . . . as they address some of the financial strain experienced by employees,” Sithole avers.

However, the NUM and AMCU are not convinced that the platinum miners are as concerned about the wellbeing of their employees as they seem.

“Miners do not care whether or not they make money; they will still retrench workers,” states Mathunjwa, who warns that, if AMCU members do not receive a living wage, the union is financially prepared to support its members for at least a ten-month strike.

He adds that it is difficult to believe that miners are as financially strained as they say they are, particularly since the price of platinum-group metals has increased from just below R800/oz in 2014 to more than R1 000/oz currently.

Another issue voiced by many stakeholders is that the platinum sector does not conduct collective bargaining with the various labour unions and miners, as is the case in the gold sector.

Gcilitshana states that the NUM has been advocating for a collective bargaining strategy for several years, but the platinum miners have been resisting this proposal.

He points out that it was only following the protracted strike in 2012 that the platinum miners joined together to reach a collective agreement.

Further, the NUM is concerned that it may not be included in the upcoming negotiations, owing to its exclusion from the negotiating table during the R12 500 wage negotiations between AMCU and the platinum miners.

While the union has minor representation in the platinum sector, Gcilitshana points out that, in sectors where AMCU, its rival, is the minority labour representative, such as in the coal sector, AMCU has not been excluded.

He warns that the NUM might strike if it is excluded from the wage negotiations.