Mine union in a zero-sum game
Workers’ gains have decimated the gold sector
WHETHER one is studying psychology 101 in the first year of university, or advanced behavioural management at postgraduate level, the mantra “Win-Stay, Lose-Change” applies equally well to both courses of study.
Because “Win-Stay, Lose-Change” is the prevalent “explainer” for the actions of almost every animal and other living entity on earth.
From gambler to housewife to manager to government official to union leaders, all creatures tend to “stay with what works” and “change when something stops working”. Win-Stay, Lose-Change guides the actions of every living organism and “organisation” constantly.
We saw this principle in action just last week, when the National Union of Mineworkers ditched its general secretary, Frans Baleni, and replaced him with David Sipunzi. What this means is that union members have given up hope on the status quo because they are no longer “winning”, and hope that by “changing” they’ll get back on the right track.
Typically, before people abandon the status quo, such as a union leader, they consider the risks and costs of that transaction. There is obviously less risk and uncertainty to sticking with the prevailing situation than adopting a new one.
It certainly is no exaggeration to say that the unions — particularly the NUM — aren’t “winning” in any conventional sense when it comes to South Africa’s gold mines.
Back in 1987, employment on the gold mines peaked at about 550 000 people. Nearly half of them — 260 000 — belonged to the NUM. And, equally impressive, the union was able to rally support from 100 000 more employees on the gold and coal mines to go on strike alongside them.
The 1987 strike, which lasted three weeks, was a watershed. Eventually, the strikers settled for no change in the 15% to 24% increase they had been offered by the mining companies, but the quantum of the increases wasn’t the important lesson.
Rather, the strike marked a shift in the power dynamic: it showed that the modus operandi, and even the future, of South African gold mining would no longer be determined by managers and owners.
The unions (and soon the government) had jumped into the driver’s seat, and would remain at the wheel for decades. The mining behemoths — particularly Anglo American — soon realised this. But many others, including the government and the unions themselves, took decades to wake up to the impact of their new-found power.
For mineworkers, it had been reasonable to assume that there is power in numbers, so they believed that belonging to a union was safer than not doing so. People usually join organisations, after all, in hopes of obtaining new income and getting protection, security and progress.
But the facts don’t seem to suggest that this is what they got.
Today, employment on the gold mines has fallen to fewer than 120 000, less than a quarter of the 550 000 in 1987 — so it doesn’t appear that belonging to a union increases one’s chance of keeping one’s job.
Sure, a gold miner who did manage to keep his job did get above-inflation pay increases during the past 12 years. But that worker was also certainly less productive for each of those years, according to figures.
Behavioural economists would say the “transition” cost or risk has led to a massive reduction in the total number of employees. So, they would say that the “win” for the remaining miners was actually a very clear “lose” for the 430 000 workers who were retrenched.
Can we use these metrics to assess if the unions have been successful?
In sports and business, performance is almost exclusively measured by the numbers.
So, should the NUM (and the government) be measured on jobs created, or jobs maintained? Or should they be judged on the scale of the wages for the remaining few?
Imagine if this was an airline: an average passenger plane would be grounded and its crew imprisoned if OUT WITH THE OLD: Former general secretary Frans Baleni represents a period in which worker numbers plummeted it lost 80% of its passengers on a flight but bragged that the remaining 20% got moved up to business class thanks to all the extra room on the plane.
Is this what the unions would call “winning” in South Africa?
The government and the unions seem to ignore how their actions help to lubricate — if not create — the continual retrenchments and terminal stage of South Africa’s gold and platinum mining industries.
It shouldn’t be that “collaboration” and “co-operation” are seen as dirty words in business, labour and government relations. On the contrary, these two elements are the cement needed to get South Africa’s mining industry back into a formidable, costeffective, world-competitive and growing business.
We have the ingredients to do this: the minerals, the experience of mining, the manpower and the physical infrastructure.
But ignoring the reality of our frailties, and our gaping competitive disadvantages, is only hastening further job losses and mine closures.
Let’s hope that the NUM’s new leader understands the magnitude of his new responsibilities, because investors certainly do.
Investors also understand the WinStay, Lose-Change paradigm because, for the past 25 years, they have won by staying out of South African gold shares. At their current trajectory, these investors are also likely to sit out the next 20 years.
Major is an analyst and mining consultant for Cadiz Corporate Solutions