Unions must face reality, says Amplats
Criticism comes after Amcu ends strike that cost miner almost R1bn
UNIONS must be aware of the consequences of their actions and can no longer act with impunity in halting sectors of the economy to bolster their demands, says Anglo American Platinum (Amplats) CEO Chris Griffith.
Amplats, the world’s largest platinum producer, has come through a two-week strike that cost almost R1bn in lost revenue as the Association of Mineworkers and Construction Union (Amcu) flexed its muscles in its first legal strike as the majority union at the company’s mines. Amcu was demanding a revision of a final plan for job cuts.
SA’s platinum, gold and chrome mines and its largest ironore mine were shut for extended periods last year by a wave of unprotected strikes, with companies struggling well into this year to restore production. Luxury car maker BMW has said it will not produce a new model in SA because of a four-week strike.
“It is a fact that unions will have to take more responsibility for the economic outcomes of their actions,” Mr Griffith said. “It is not possible that we can continue with these kinds of strikes, which are having an effect not only on the mining sector but all sectors of the economy. It’s hurting the economy,” he said. “It’s not about taking away people’s right to strike but there’s got to be more time spent by unions analysing the impact on jobs of their current actions. It is impacting jobs.”
The intertwined relationship between the government and unions was poisonous for the economy, said Cadiz Corporate Solutions’ Peter Major.
“This is definitely the wrong government for the country because they’re in tight with the unions and everything they do is collective,” he said.
“There is no flexibility in this labour force. We’ve got to start dealing in reality here. We’ve got to start thinking out of the box or we’re going to have the majority of these mines closing.”
Amplats has undertaken a 10month process to reduce the number of people it employs as part of a major restructuring programme to position the business in an oversupplied platinum market
Its initial proposal in January was to shut four shafts and reduce its workforce by 14,000 people. The government and unions reacted with fury, threatening Amplats and parent Anglo American with dire consequences.
After months of talks with the government then formal negotiations with unions, the number of people facing retrenchment was whittled down to 3,300.
Amplats opted to keep one of the four mines earmarked for closure open for up to five years, saving more than 4,000 jobs. About 4,700 people took severance packages and 2,600 vacancies throughout Amplats were filled, and 1,600 contractors replaced with employees. Workers also took early retirement.
Amcu launched a two-week strike from September 27 to force Amplats to revisit plans to retrench 3,300 workers. It cost 44,000oz of lost output.
A deal was struck whereby the 3,300 were given the more lucrative voluntary severance packages compared to the retrenchment payout. Amplats agreed that 1,250 of those workers could remain with the company for six months doing reclamation work at the shafts that were closed.
Amcu and Amplats found 328 contractor jobs that could be filled by company employees. Amplats has cut its contractors to 3,600
from a peak of 36,000 in 2006. Amcu president Joseph Mathunjwa said the deal was a “very positive breakthrough”.
Several analysts have said the state is not allowing businesses to react to market conditions and is meddling in key decisions.
“The involvement of the government has not resulted in the company not being able to execute business as it should be entitled to do,” Mr Griffith said.
The entire restructuring package, of which jobs was just one element, has continued unabated, he said. “It has probably taken a bit longer because of the engagement, but that’s probably a feature of business going forward. There will need to be greater engagement and more time spent between government, labour and business. That’s a reality business will need to get used to.”
A London-based analyst said the process had taken too long. Amplats has estimated the restructuring cost at R2.6bn but it has had to pay wages and keep mines open longer.
“The cuts are just not big enough. There are new mines coming on line in the next three or four years and the majors really should have started making substantial production cuts. But the government and union position on these types of cuts makes that impossible,” the analyst said.