Workers will always lose to the free market
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.