Work­ers will al­ways lose to the free mar­ket

CityPress - - Business - Terry Bell busi­ness@ city­press. co. za

Large-scale re­trench­ments in the min­ing sec­tor, run­ning to tens of thou­sands of jobs, are prob­a­bly in­evitable. But only be­cause of the sys­tem in which we have to op­er­ate.

This is the stark re­al­ity be­hind the cri­sis talks con­vened last week by Min­eral Re­sources Min­is­ter Ngoako Ra­matl­hodi. It is a case of bet­ter late than never, be­cause such talks should have been held at least a year or two ago – when it be­came ob­vi­ous a cri­sis was loom­ing.

In the af­ter­math of Marikana in Au­gust 2012, re­newed mil­i­tancy among min­ers, who de­manded – and de­served – a de­cent liv­ing wage and bet­ter con­di­tions, meant that the cost to com­pa­nies in­creased. How­ever, it is the fidu­ciary duty of com­pany di­rec­tors to max­imise prof­its, and that means, where pos­si­ble, costs must be cut.

South Africa’s his­tor­i­cally mas­sively prof­itable min­ing in­dus­try was built on cheap labour, with wages the great­est op­er­at­ing cost. When it be­comes pos­si­ble to op­er­ate by cheaper means, the sys­tem de­mands that jobs must go.

In re­ac­tion, there have been calls for the min­ing com­pa­nies to ex­er­cise “so­cial re­spon­si­bil­ity” – to, in ef­fect, put the wel­fare of peo­ple be­fore prof­its. But the sys­tem does not al­low for this: it would cer­tainly be ac­tion­able if com­pa­nies de­prived share­hold­ers of div­i­dends in or­der to re­tain un­prof­itable work­ers.

This is not a moral judg­ment, merely a state­ment of fact. The free mar­ket cap­i­tal­ist sys­tem de­mands that profit be the only pri­or­ity. As the late Milton Fried­man, fa­ther of what is now la­belled ne­olib­er­al­ism, once noted: “Any com­pany di­rec­tor who pri­ori­tises so­cial re­spon­si­bil­ity should be sacked on the spot.”

In busi­ness, there­fore, it is the bot­tom line that mat­ters. This makes for an ex­ploita­tive and po­ten­tially bru­tal sys­tem in hu­man terms.

It was this re­al­ity that gave rise to trade unions as re­ac­tions to a sys­tem in which work­ers could be­come mere dis­pos­able ci­phers. As a re­sult, we have what has of­ten been de­scribed as “con­struc­tive ten­sion” be­tween op­pos­ing in­ter­ests in the work­place.

But in a par­lia­men­tary democ­racy, gov­ern­ments are faced with hav­ing to per­form a bal­anc­ing act, need­ing both fund­ing from com­pa­nies and the vot­ing sup­port of work­ers. In South Africa, with lo­cal gov­ern­ment elec­tions loom­ing, work­ers have a lit­tle more lever­age with a gov­ern­ment that still re­mains com­mit­ted to main­tain­ing the sys­tem of com­pe­ti­tion and the ac­cu­mu­la­tion of profit.

As a con­se­quence, Ra­matl­hodi will be des­per­ate to have the gold pro­duc­ers and unions strike a com­pro­mise that would avoid both a labour and cap­i­tal strike. How­ever, for any hon­est com­pro­mise to be reached, the gold pro­duc­ers will have to be can­did about their book­keep­ing.

Trans­parency is called for be­cause, over the past decade, the gold price, while fluc­tu­at­ing, has soared. At the same time, the ex­change rate value of the US dol­lar to the rand has more than dou­bled and the bulk of min­ing costs are in rands.

What this means is that, in 2005, with an av­er­age gold price of less than $500 and an ex­change rate of R6 to $1, gold earned roughly R3 000 an ounce. This week, the com­pa­ra­ble fig­ures were $1 120 and R12.70, or more than R12 000 an ounce.

How­ever, ap­pro­pri­ate rates of pay and de­cent con­di­tions for min­ers have, in many in­stances, be­come more ex­pen­sive than ma­chines. So the march of mech­a­ni­sa­tion will con­tinue. And that means jobs will be lost, never to re­turn, even if com­mod­ity prices rise.

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