Rocks and hard places strike sparks in mining wage talks
Sibanye and the unions have very little wiggle room
Sibanye-Stillwater CEO Neal Froneman has set the stage for what could be a bruising encounter with the unions negotiating wage increases at its gold mines. Froneman said a reason for the dismal state of SA’s gold mining industry was the repeated capitulation of companies in granting above-inflation wage increases during wage talks.
While this trend is understandable, given the history of the mining sector in exploiting workers and the need to correct the injustices of the past by in part bumping up wages for a tough and dangerous job, it has come with consequences.
SA’s gold mines are deep, labour intensive and increasingly less productive, with falling grades and outputs, and soaring costs. With the cost of labour making up half or more than half of the costs of producing gold, one of the few levers left to pull in correcting the cost-to-revenue balance is the reduction in labour.
The numbers express this more clearly than any number of words can: employment in SA’s gold sector has fallen to 112,000 from 400,000 people in 1994, while production dropped to 138 tonnes from 583 tonnes.
Figures from the Minerals Council of SA for total wages paid in the gold sector date back to 2009, but show the increase from R17bn to R30bn up to 2017, a stark contrast to the falling labour and output numbers.
While workers cannot be expected to subsidise their employers with lower wages or below-inflation increases, Froneman’s stance is that there has to be a fair settlement that will sustain mining for years to come.
Sibanye is the last of four companies still in talks about wages, with no end in sight. Given the pressure on the unions from their members for more money, the dismal employment levels in SA, and demands for profits from shareholders, there is very little room left to manoeuvre.