The Platinum Industry Strike: Who Blinked First?

A Personal View – April 2014

South Africa has not experienced a strike of this intensity & magnitude since Cyril Ramaphosa led NUM [The National Union of Mineworkers] to strike on the mines in the mid-eighties.

However this strike will be a seminal event for many reasons.   This comes hard on the heels of the Marikana Massacre in 2013. If for no other reason, this factor will make the mine workers less amenable to a mediocre wages increase. But more importantly, given Joseph Mathunjwa’s loathing of NUM, his former Union, he would like to settle scores with them after his less than amicable departure from his former Union. He is determined to prove a point against NUM as well as the mine bosses.

This does not bode well for the Platinum Mines in particular and South Africa in general. With the Gold Mines in terminal decline with no more than an additional 10 to 15 years life remaining, the platinum industry will become the mainstay of the mining industry for the foreseeable future.

By some crooked accounting, a settlement of R12500 per month for the lowest paid worker will be achieved shortly. AMCU’s militants have demanded that the salary of R12500 must be the cash cost and must not include company contributions to Pension & Medical Aid. That implies that the gross cost to company will be of the order of R15000 to R16000 per month.

This raises alarm bells in my head immediately.

Firstly what lessons will be learnt by organised labour: militancy counts. If AMCU through their belligerency can obtain such a settlement why – they will rightfully reason – can’t they also demand and receive R12500 per month.

While nobody, and least of all me, is begrudging any workers a decent living wage, without commensurate productivity improvements that level of increment is unsustainable for the economy. If this level of increase is forced onto the marginal gold mining industry, it will only hasten its decline.

This could be a repeat of the Coal Miners in the UK where Arthur Scargill & his merry men could not accept that the coal mines were at the end of their useful lives & were demanding that the British government merely subsidise the marginal worked-out mines. Thirty years later, Mr. Scargill is still bemoaning the “premature” closure of all the coal pits in the UK.

The Gold Mines will face an instant crunch, either mechanise or close all shafts with low ore grades which, whether the Unions would like to be obdurate like their British counterparts or not, comprises the bulk of the gold bearing rock today.

Even the much more profitable platinum mines will face the prospect of mechanisation but the lower ore bodies being first on the list. With its current rate of unemployment, this is the antithesis of what South Africa requires at this juncture but this will become a stark reality should the increase be agreed upon & a contract concluded.

What about the rest of organised labour in South Africa? The first to gird their loins will be the public servants. They will contend that if the recalcitrant Capitalists can treat their workers so well, why cannot government do the same?

Given such pressure from a labour friendly administration, they will quickly accede to SAMWU’s, POPCRU’s and SADTU’s demands. With a wage bill already at bursting point, this will be the last straw that breaks the camel’s back, so to speak. The conflation of explosive growth in number of employees – a quarter of a million during  Zuma’s regnum alone – and exponential wage increments, will be the proverbial finger in the dyke scenario. Even Mighty Mouse Pravin Gordon will be swept away in the avalanche of budget deficits.

Workers will then have their living wage; but this will be reserved only for the minority who have jobs. The rest will be consigned to prolonged, if not life-long, unemployment.

That scenario does not bode well for social stability in South Africa. The well-trodden path of populist economic policies in the South American mould, with the like of Julius Malema being in the vanguard, will be the order of the day.

This is not an enticing prospect for industrialists & entrepreneurs.

Never before in South Africa’s history have the consequences of a strike been so far-reaching. With a natural desire to get back to business, the Platinum Industry might just be setting the trend for unsustainable wages increases which South Africa cannot accept without significant productivity increases which is only attainable through mechanisation.

A sad fact, but an ineluctable reality: a jobless future.





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