21 May, 2013 18:30

Mining Sector Faces Wage Conflict.

The mining sector faces a new crisis. Talks have been launched between gold mining companies and the unions, with demands for wage rises of up to 60%. This comes as output is in decline, rival mining unions are fighting a turf war, and costs are being pushed up, not least by parastatal Eskom. So what do those in-the-know think is looming?

Expert views

1. Frans Cronje of the SA Institute of Race Relations

If market forces determined wage levels in mining in SA they would be significantly lower than they currently are. Controversially this would be a better state of affairs in many respects to the one that currently applies in that sector where wage levels are pricing workers out of jobs and mines out of production. Of course many will take issue with this analysis but they would then have to accept that the consequences of the policies they support must necessarily contribute to a declining industry and therefore less overall social and economic advancement and upliftment. In addition it is important to keep in mind that post-Marikana, low cost labour became politically incorrect. Hence even where certain classes of investors would be able to employ semi-skilled South African they will shy away from this fearing the inevitable backlash from parts of government and civil society. The unhappy conclusion is that the future of the mining industry as driver of employment does not look good. Mechanisation will increasingly be the way to go as miners seek to lessen their exposure to the political heat that attaches to employers of large numbers of semi-skilled workers across South Africa. There is an upside to this trend that in turning to mechanisation, and particularly robotic drilling, gold miners to reach even deeper underground and access new seams that may prolong the life of certain mines. However the investment in this technology will require certainty over mining rights and policy which is unfortunately lacking.

2)Independent Analyst and Economist Ian Cruickshanks:

I notice that Unions never make requests – they make demands The mining industry is really important to the economy. Mining makes up 10% of South Africa’s GDP. In addition, there are all the services around mining. If this wage round leads into a protracted strike, it will have a significant impact on the economy. The 60% demand is unaffordable, as some mines are close to break-even, or operating at a loss. So a big increase in wages would mean further mine closures and more unemployment. The situation has never been more desperate than it is now.


Trouble is ahead. The fan is spinning. The only question is the quantity of shit flying in its direction.

Tweet of the Day

Clayson Monyela (@ClaysonMonyela): With SA as a key partner, DRC has announced Oct 2015 as construction date of the 1st phase of the largest hydroelectric plant in the world.

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