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Gold sector wage negotiations begin

Employers look to affordable wage increases that help the gold sector extricate itself from crisis, says chief negotiator Motsamai Motlhamme.

NOMPU SIZIBA:  Wage negotiations in the gold sector began today. Num, the largest union in the sector, is said to be demanding entry-level underground pay of R10 500 a month over a two-year period. Amcu, the second-largest union in the gold sector, is said to be seeking R12 500 a month. This compares to current minimum basic wages at some mines which stand at around R7 700 a month. The wage talks are happening against a backdrop where gold production has declined for seven straight months to the month of April this year.

Well, I’m joined on the line by Motsamai Motlhamme, who is the chief negotiator for the gold sector at the Minerals Council of South Africa. Thanks very much for joining us, Motsamai. It’s the beginning of the gold-sector mine wage talks. So typically what happens at the start of these types of negotiations and why do gold miners prefer to make their offers collectively as opposed to having individual negotiations with various unions?

MOTSAMAI MOTLHAMME:  Thanks, Nompumelelo. Well, central collective bargaining historically in the mining industry started in 1938 in the gold sector, and we’ve traditionally always come together under the auspices of the Minerals Council to have these wage negotiations. So it’s just a continuation of tradition and what has been in place over a number of years.

NOMPU SIZIBA:  Okay. It’s the beginning of wage talks. We, the public, have been informed about what the expectation is of the workers, but how do you begin those negotiations, because you obviously haven’t laid your cards on the table yet? So what typically takes places at the beginning?

MOTSAMAI MOTLHAMME:  Well, typically the first days like today are utilised for unions to talk of their demands, take us through, explain the demands, motivate the demands, stating where they are coming from and what lies behind the demands that have been presented – what would then happen, which is what we agreed.

So they today go through this process that I’ve just explained, we are now going back as employers and we are going to go through every single one of those demands, look at the motivations and then form an initial view in terms of how we look at those demands. And then next week, when we resume negotiations, we would then start talking to the demands specifically as employers.

NOMPU SIZIBA:  So, to avoid year-in, year-out wage negotiations, does the gold mining sector look to secure an agreement for a number of years in order to manage cost expectations over a certain period, and the associated unrest that comes with these negotiations?

MOTSAMAI MOTLHAMME:  Yes, traditionally as well we’ve always signed two-year wage agreements in the gold sector. In 2015 for the first time we signed a three-year wage agreement. And that’s what we are hoping to get as employers out of this year’s wage negotiations as well – a longer-term agreement in order to create stability.

NOMPU SIZIBA:  So there are lots of figures out there. I just wanted to get a sense from you – where do average wages in the sector currently stand for underground workers in terms of the basic salary?

MOTSAMAI MOTLHAMME:  Well, the entry-level basic salary would be slightly different for the different companies, because in 2015 for the first time companies gave differentiated wage increases. But it would range between R7 300 to about just over R8 000, and that’s only on basic wages. That’s the entry level, the minimum for the lowest-paid employees.

NOMPU SIZIBA:  While there must be an appreciation that mineworkers, just like any other workers, are faced with higher costs of living, what challenges does the gold sector face in meeting workers halfway, while at the same time trying to operate in a sustainable way?

MOTSAMAI MOTLHAMME:  Well, Nompumelelo, the challenges that the mining industry are facing quite numerous. Obviously, for starters, about 74% of gold mines are not sustainable at 2017 average gold prices. We’ve had a generally stagnant gold price for the past couple of years. Production has declined significantly – in fact, in the ten-year period between 2007 and 2017 production declined by 45%; but at the same time the costs have risen quite significantly. You would be aware that the cost of electricity has risen by just over 300% over the past decade, and labour costs currently account for about 53% of total cost of operations for the mining industry. The gold sector’s contribution to GDP has declined by 49% in the ten-year period between 2006 and 2016. Now, to top it all, Nompumelelo, we are dealing with mines that have got ageing infrastructure, mines in which it’s now difficult to access the ore, and issues of sustainability have become real. And these are things that we now need to face and deal with.

NOMPU SIZIBA:  What you’ve indicated now is that you’ve had the initial discussions with the unions. They’ve laid their cards on the table and you are going to consider what they have to say. So when is the next meeting? You said it’s next week, but when and at what point are you also now going to lay your cards on the table based on the deliberations that you will have had?

MOTSAMAI MOTLHAMME:  Well, our next engagement is on Wednesday July 18. At this stage we are still going through the demands and the motivations. We are actually going to start to do that tomorrow, so one doesn’t really have a sense of what we will be able to put on the table on Wednesday next week. But once we’ve worked through these demands and motivations, we should have them by Monday or Tuesday at the latest. We’ll have a better sense of what we will be able to talk to the unions about on Wednesday.

NOMPU SIZIBA:  In 2014 there was that terrible five-month strike in the platinum sector and miners lost a lot of money in wages as a result, and of course the sector suffered as a whole. No doubt the thought of even one day’s strike action in the gold sector is not something you’d want to contemplate. So are you confident, based on the relationships, that you and the unions will be able to meet halfway and come to an agreement sooner rather than later?

MOTSAMAI MOTLHAMME:  Nompumelelo, that’s what we are hoping for. What we are looking at is how to give increases that are affordable, but which at the same time will enable the gold sector to get out of the crisis that it is in. So it’s just a matter of striking the correct balance of being responsible. But these are discussions, as you say, that we are still going to engage with the unions on, starting from next week.

NOMPU SIZIBA:  Given all the challenges that you outlined earlier, over the past number of years are you able to give us a statistic of the number of jobs that have been lost in the gold sector?

MOTSAMAI MOTLHAMME:  Ja. Between 2007 and 2017 employment declined by 32% in the gold sector, and the large bulk of those retrenchments would have happened, as you would know, from 2015, 2016 and 2017. But in total for those ten years it comes to a 32% decline in employment.

NOMPU SIZIBA:  Alright then. All the very best with those negotiations, Motsamai. Thank you for your time.

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