Mine Kampf

Are unions re­spon­si­ble for the drop in em­ploy­ment?

Finweek English Edition - - Economic trends & analysis - GARTH THE­UNIS­SEN

SINCE 1984, EM­PLOY­MENT in the min­ing in­dus­try has fallen 43,61%, a fact blamed on ev­ery­thing from in­creas­ing mech­a­ni­sa­tion to mines be­ing wast­ing as­sets.

What’s sel­dom pointed out, though, is the mas­sive in­crease in mineworker re­mu­ner­a­tion since the early Eight­ies.

In 1984, the av­er­age an­nual salary of a South African mineworker was a piti­ful R5 963,30. By 2005 this had risen to R82 795,92 – an in­crease of over 1 288%. Viewed in that light, the 43,61% de­cline in em­ploy­ment on SA’s mines seems al­most be­nign.

Of course, one must also take in­fla­tion into ac­count to de­ter­mine the real in­crease in re­mu­ner­a­tion. Given that in­fla­tion av­er­aged 9,99% a year be­tween 1984 and 2005, the an­nual salary of a mineworker would have had to in­crease to at least R42 645,36 to negate the in­creased cost of liv­ing. In re­al­ity, wages in­creased by al­most dou­ble that amount.

Then again, re­al­ity does tend to be more com­plex than sim­ple eco­nomic mod­els as a host of vari­ables could lie be­hind the mas­sive in­crease in mineworker re­mu­ner­a­tion.

It’s likely that the ra­tio of skilled to un­skilled work­ers has in­creased since 1984 as mines strove to im­prove pro­duc­tiv­ity. This would have pushed up the av­er­age wage of minework­ers.

One also has to bear in mind that in 1984, with apartheid in full swing, there would have been very lit­tle pres­sure on min­ing com­pa­nies to pay their mostly black minework­ers a liv­ing wage. Wage in­creases have thus come off a very low base.

A less pop­u­lar rea­son be­hind the in­crease in re­mu­ner­a­tion (and pos­si­bly the fall in em­ploy­ment lev­els) could be the in­creased union­i­sa­tion of minework­ers.

Con­trary to pop­u­lar be­lief, unions are not de­signed to in­crease em­ploy­ment. Their man­date is to get the best pos­si­ble salaries for the ma­jor­ity of their mem­bers, of­ten at the ex­pense of other work­ers. How­ever, be­fore we can draw any solid con­clu­sions, we have to look at min­ing by sec­tor, as the for­tunes of SA’s dif­fer­ent com­modi­ties have var­ied dra­mat­i­cally over the last two decades.

Take the gold min­ing sec­tor, eas­ily the worst hit by the de­crease in em­ploy­ment. In 1984 SA’s gold mines em­ployed 511 308 work­ers. By 2005 this had fallen to a mere 160 634 – a de­crease of 68,6%.

Again, it ap­pears that in­creased re­mu­ner­a­tion could be to blame. In 1984 the av­er­age worker on a gold mine earned R5 562,91 a year. By 2005 this had in­creased to R75 657,96 – a mas­sive 1 260% in­crease.

If we sim­ply wanted to ad­just the 1984 wage for in­fla­tion (9,99%), then a gold miner’s an­nual salary should have in­creased to R39 775,54.

Again, re­al­ity is the thorn in the side of this the­ory. Given that the 1984 wage was ex­tremely low, we had to ex­pect that wages would rise to more eq­ui­table lev­els given the po­lit­i­cal changes in SA.

But set­ting emo­tions aside, the cold ques­tion is: If unions are re­spon­si­ble for the in­crease in the av­er­age wage, are they also re­spon­si­ble for the de­crease in em­ploy­ment?

In­de­pen­dent labour an­a­lyst Gavin Brown says this is not an un­rea­son­able as­sump­tion.

“It’s cer­tainly no sur­prise,” he says. “As a rule, unionised work­ers tend to be bet­ter paid than non-unionised work­ers in any sec­tor. This is a nat­u­ral con­se­quence of col­lec­tive bar­gain­ing.”

Brown also says there’s a pre­mium at­tached to union­i­sa­tion in that if the price of labour goes up rel­a­tive to the price of cap­i­tal, em­ploy­ers will lean to­wards the cap­i­tal side of the pro­duc­tion mix.

In the gold min­ing sec­tor this has cer­tainly been a trend, par­tic­u­larly in new min­ing ven­tures, which are be­com­ing in­creas­ingly cap­i­tal in­ten­sive.

“This is not only due to the cost of labour but also the has­sle fac­tor of em­ploy­ing labour,” says Brown. “With a ma­chine you know what pro­duc­tiv­ity you’re get­ting, but in­creased pro­duc­tiv­ity of­ten has to be coaxed out of the unions af­ter a long col­lec­tive bar­gain­ing process.”

How­ever, Frans Barker, chief labour ne­go­tia­tor for the SA Cham­ber of Mines, says no sin­gle fac­tor can be blamed for the de­crease in em­ploy­ment.

“It’s a com­plex variety of fac­tors that in­cludes the de­te­ri­o­ra­tion of the ore body, in­creased mech­a­ni­sa­tion as well as in­creased costs re­lated to ac­com­mo­da­tion, health­care and greater so­cial re­spon­si­bil­ity,” he says. “Union­i­sa­tion has played a role but it’s only one slice of the pie.”

There is a pre­mium at­tached to union­i­sa­tion. Gavin Brown


Source: Dept of Min­er­als and En­ergy

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