June 26, 2013 5:18 pm

Upstart South Africa union submits demands to gold companies

Striking miners chant slogans as they gather at the AngloGold Ashanti mine in Carletonville©Reuters

The upstart union that has made strong inroads into South Africa’s mining sector has put down its marker ahead of crucial wage negotiations by submitting initial demands to gold companies that would see the wages of some workers doubled.

The Association of Mineworkers and Construction Union (Amcu) has proposed that all entry level underground workers should receive a minimum of R12,500 ($1,234) per month and all surface workers should earn R11,500 per month.

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The R12,500 figure was a rallying call during the wildcat strikes that swept across the platinum and gold sectors last year. About 50 people were killed in violence related to that unrest and the industry is estimated to have lost more than R15bn in revenue.

The strikes also battered South Africa’s image as an investment destination. This year’s wage negotiations, which will take place in gold, platinum and coal, as well as other sectors, will be a critical test of the fragile state of labour relations in Africa’s largest economy.

At present, the basic monthly wage for entry level miners in the gold sector, which includes AngloGold Ashanti, Gold Fields and Harmony Gold, is about R5,000 per month, which rises to about R10,000 with benefits and bonuses, but it varies from company to company.

The negotiations are expected to begin next month, in an unpredictable and tense environment.

Mining groups have warned than any significant increase in wages will risk more job losses and shaft closures as executives complain of spiralling costs and a subdued commodity price outlook.

But in its submission to the Chamber of Mines, Amcu called for increases in housing allowances, living out allowances, bonuses and other benefits, as well as a restructuring of the categorisation of workers.

“On a daily basis mine workers experience a declining standard of living and the dream of sharing in the wealth of the country remains a pipe dream,” Amcu said in a document seen by the Financial Times. “We believe therefore that the minerals of this country must now benefit the people as per our [South Africa’s] constitution.”

The main players in the gold sector negotiate through collective bargaining under the Chamber of Mines.

Amcu, which is now the majority union in platinum, is estimated to have about 17 per cent representation in the gold industry, meaning it should have a seat at the negotiating table.

However, it is still not clear if Amcu will use collective bargaining or attempt to negotiate on its own, which would further complicate the process.

Its bitter rivalry with the National Union of Mineworkers (NUM), which had been the dominant union for three decades, has been blamed for sparking violence and exacerbating tensions in the sector.

In its demands to the Chamber of Mines, the NUM called for surface workers to receive a minimum of R7,000, with underground and opencast workers earning a minimum of R8,000 per month.

Unions have traditionally submitted high demands as bargaining chips but have been willing to negotiate to reach a solution. But with Amcu, which grew rapidly during and after last year’s strikes, there is no record or precedent, with fears that more unrest could erupt.

In the platinum sector, companies negotiate with unions on a company by company basis.

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