Gold giants want pay linked to productivity
THE debate about wages for mineworker in the gold mining sector is about to take a longoverdue turn.
The four biggest gold mining companies in South Africa say productivity must be included in any new wage deal. Wage talks are due to begin some time next month, and the labour-company compact could look radically different afterwards.
AngloGold Ashanti, Gold Fields, Sibanye Gold and Harmony Gold have been trying for at least a decade to link pay increases to efficiency gains.
After platinum workers won basic wage hikes of as much as 20% following a five-month strike last year, they say a productivity link is needed more than ever.
“2015 is the year where both sides, the workforce and the companies, have to say: ‘We share in the risk, burden and upside of productivity,’ ” said AngloGold CEO Srinivasan Venkatakrishnan in an interview.
Any wage agreement linked to productivity would mean a portion of employees’ pay would be dependent on the performance of the mine or company. The industry’s current deal, which includes R5 400 a month basic pay for entry-level workers, is due to expire in June.
However, a productivity-linked agreement may help companies to offer starting pay closer to the R12 500 a month demanded by the Association of Mineworkers and Construction Union when it led the platinum strike last year.
Still, such an accord may be difficult to reach.
The gold mining industry conducts wage negotiations through collective bargaining, which means an agreement between the largest companies and the majority union is applicable to all employees. This makes productivity clauses more complex to agree on, according to Andrew Levy, managing partner of labour GREATER IMPERATIVE: Gold Fields CEO Nick Holland SHARED RISK: AngloGold CEO Srinivasan Venkatakrishnan market consultancy Andrew Levy Employment.
Levy said it was impossible to negotiate productivity clauses through collective bargaining because worker efficiency could differ at each mine, depending on factors such as ore grade, machinery used and extraction techniques.
But the subject must be addressed, “if mining is going to go ahead and prosper and transform itself”.
It has been tried before. In 2011, the Chamber of Mines, which negotiates on behalf of the gold mining companies, concluded an inprinciple agreement to link pay to productivity. This was derailed a year later when workers were killed by police at Marikana
Elize Strydom, the chamber’s chief negotiator, said the chamber “needs to put this issue on the table and really push very hard”.
Whereas pay agreements were concluded between companies and the majority union centrally, productivity-linked bonuses could be “implemented at company level”, she said.
Gold Fields CEO Nick Holland said companies would redouble their efforts to introduce such measures this year. “There’s a greater imperative than ever to do something innovative. That helps to grow the pie for both the companies and the employees.”
Sibanye, the biggest producer of gold in South Africa, is keen to start talks with unions about performance-based pay before formal wage negotiations begin. “Productivity has to be part of the mix,” said CEO Neal Froneman. “It probably can’t wait until absolute negotiations. We have to do things differently, we have to start talking about things now.”
Venkatakrishnan is keen to push efficiency targets because the company’s South African mines are its least productive on a per-worker basis.
Productivity at its South African mines was less than five ounces per total employee costed in 2013, according to AngloGold’s annual report.
The equivalent figure for AngloGold’s Sunrise Dam mine in Australia was 50.2 ounces and for Cripple Creek in the US 37.4 ounces. At Iduapriem in Ghana, it was 18.4 ounces.
South Africa’s relatively low productivity is partly due to its low-grade ore, ageing operations and a mining method that uses more people than machines, a legacy of the pre-democratic era when workers had fewer rights and wages were lower, according to Levy. — Bloomberg