JOHANNESBURG (miningweekly.com) – Gold producers engaged in this year’s centralised wage negotiations on Monday tabled their opening offer, proposing a 4% increase in basic pay and a 4% increase in the living-out or housing allowance, which was notably below union demands.

Negotiations between gold producers, represented by the Chamber of Mines (CoM), and trade unions, namely the Association of Mineworkers and Construction Union (AMCU), the National Union of Mineworkers (NUM), Solidarity and Uasa, started last week.

The NUM has demanded wage increases ranging from 15% to 60%, while its rival, AMCU, said on Tuesday it wanted companies in that sector to more than double wages for entry-level workers.

The 2013 wage demands had been submitted to the chamber, with the NUM, in addition to several other high-cost items, proposing a surface entry level salary of R7 000 a month and an underground and opencast entry level salary of R8 000 a month.

Solidarity proposed a wage increase of 14% and increases in various other benefits, which it reduced to 10% on news of the employers’ first offer, while Uasa suggested a wage increase of 18%.

All indications were that AMCU would participate in this year’s centralised collective bargaining process, with the union calling on producers to, in addition to several other high-cost items, double entry-level wages to R11 500 for surface workers and R12 500 for underground workers, excluding accommodation, bonuses and benefits.

The CoM said in a statement that its initial offer would, in effect, raise the guaranteed pay of entry-level underground employees for major gold producing companies to at least R8 900 a month and entry-level surface employees to at least R8 000 a month.

The figure included basic wages, living-out allowances, medical benefits and retirement contributions and excludes statutory benefits, other allowances, profit share, overtime and bonuses.

The chamber highlighted that the anticipated effect of the offer would be to increase the yearly payment to employees by gold employers by some R900-million to about R23-billion a year.

CoM employment relations senior executive Dr Elize Strydom and the employer representatives told the unions that labour costs currently constituted between 50% and 55% of gold producers’ total costs and that factors such as the declining gold price, spiralling costs, falling gold production and productivity had to be considered in determining their initial offer.

The employers noted, further, that above-consumer-price-index increases were granted to employees in July last year, as well as unscheduled increases in October.

Strydom pointed out that wages received by employees in the gold sector compare favourably with wages and benefits in similar occupations in other labour-intensive industries.

With regard to union demands for employee category roll-ups, the employers noted that they were not in a position to contemplate further roll-ups, as these would have significant and unaffordable cost implications and negatively impact job organisational structures, beside others.

The CoM stated that rock-drill operators (RDOs) had received either an increase or allowances that exceeded the wage increases granted to all category four to eight employees in October last year.

Further, the CoM had established a task team to investigate the matter of reckless lending and garnishee orders by workers and proposed the establishment of a joint task team with organised labour to develop solutions and investigate and address the extent of the problem and the legality of judgments and garnishee orders.

The task team would also investigate internal reforms regarding automatic payroll deductions in line with the Framework Agreement for a Sustainable Industry, signed earlier this month.

“It is clear that the gold mining industry is facing significant challenges. How will we overcome this? It is going to require good faith negotiations and a preparedness to give and take. It is going to require us to work together to find the balance between what the companies can afford and what employees need. This is our collective responsibility,” Strydom said.

She stated, however, that the proposed house rules or protocol that would guide this year’s negotiations had not yet been finalised, but added that all parties remained committed to completing the document.

Solidarity general secretary Gideon du Plessis stated that the CoM’s opening wage offer and the fact that no agreement could be reached regarding a document on the house rules suggested that the 2013 negotiations would be exceptionally challenging.

He said the chamber's introductory presentation on Monday further outlined a dismal picture with about 60% of the country's gold mines being unprofitable, 14 000 jobs lost over the past two years and South Africa for some time not being the world's top gold producer, but currently relegated to the sixth position.

Du Plessis highlighted that, to reach a settlement, employers would be required to increase their offer to above the budgeted figure.

”Union members will also have to accept a lower-than-expected increase,” he noted, while adding that strong leadership from employers and unions would be needed to reach a settlement that would help put South Africa’s gold industry back on track.

The unions would respond to the CoM’s proposal on July 24.