Are unions responsible for the drop in employment?
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