Gigaba slams boss perks at parastatals
PRODUCTION at Lonmin’s Marikana mine is expected to resume today after the signing of an unprecedented 22 percent wage increase, which has analysts fearing the long-term payback will be job losses and an acceleration of inflation.
In the aftermath of the Lonmin stand-off, mining companies Anglo American Platinum and Gold Fields have taken a tough stand, threatening to dismiss, by today, workers who did not return from copycat strikes that are not sanctioned by the courts.
Angloplat resumed operations on Tuesday at its five Rustenburg mines after mining was halted last week to protect employees amid rising tensions in the platinum belt.
Meanwhile, Cosatu general secretary Zwelinzima Vavi rushed out of the federation’s all important national congress yesterday to speak to the 15 000 striking employees at Gold Fields’ Kloof-Driefontein Complex West operation, after the company drew a line over negotiating salary demands.
“The gold mining industry, unlike the platinum industry, negotiates in a collective bargaining forum. All gold mining companies negotiate jointly with the trade unions,” Sven Lunsche, the spokesman at Gold Fields, told Sapa.
He added that dismissing employees was one of the options on the table, and the company would only take such a decision after all other routes were exhausted.
Industry insiders said Vavi felt Cosatu had been caught napping on the Marikana issue and believed it was time for it to take centre stage in labour matters as opposed to its position in the tripartite alliance.
Despite the resolution at Lonmin, tensions in the platinum belt remained high with unrest at Angloplat resulting in police firing teargas to disperse the crowd.
Lonmin stock rose as much as 10 percent to R95.16 on the JSE yesterday as the market welcomed the news of the end to the strike, but it gave up most of the gains to close at R87.80, 1.49 percent up on the day.
The strike involved 28 000 employees who were demanding a R12 500 monthly salary. The employees had negotiated directly with the Lonmin management without a third party. Michael Bagraim, the president of the Cape Chamber of Commerce, said this would bring uncertainty to the mine.
Vusi Mabena, the executive for stakeholder relations at the Chamber of Mines, said: “If you negotiate outside the union the offer is unsustainable, today this group of employees will demand an increase, then what happens tomorrow when another group within the company demands an increase and goes on strike?”
The National Union of Mineworkers ( NUM) signalled yesterday that it would demand significantly higher salaries across the sector.
Dawie Roodt, the chief economist of the Efficient Group, said the 22 percent gain for those who benefited most from the Lonmin settlement would be offset by a loss of about 12 percent of annual pay during the wildcat strike. However, they would also have the benefit of a once-off R2 000 incentive for returning to work.
Economist Mike Schussler said there were long-term implications to the wage settlement reached at Marikana, which could include job losses or an acceleration in inflation.
“Other workers are going to want similar increases,” Schussler said. “And this comes at a time when wage increases are already high.”
He noted that the Quarterly STOCKS made modest gains yesterday, coming off record highs reached in early trading as investors fretted that Lonmin’s wage increase deal with striking workers could trigger more pay demands in the mining industry.
The JSE all share index lifted 0.05 percent to 36 463.14 points, after earlier touching a record high of 36 647.98 points.
BoE Stockbrokers trader Henre Employment Statistics released this week by Stats SA showed that, between May last year and May this year, employee earnings rose 12.6 percent in the non-farm formal sector.
He said this was part of an ongoing trend of above-inflation increases. The other potential consequence was that employers would replace workers with capital equipment.
He questioned whether Marikana would be able to survive the agreed increases. “Something has to give. Either they have to get a big capital injection or they have to employ fewer workers.”
The settlement was reached Herselman said:”We still have euro zone debt crisis and no one knows if Lonmin’s pay deal will set a dangerous precedent.”
Lonmin closed 1.49 percent higher at R87.80.
Its shares rose more than 10 percent in early trade on news of the pay deal but gave up most of those gains as the reality of the extra costs to the company sunk in. – Reuters following talks facilitated by the Commission for Conciliation, Mediation and Arbitration between Lonmin, unions and worker representatives.
NUM, which has been criticised for losing touch with its members, said it would intensify its stance to wage negotiations. “It is clear that it is okay to go on an illegal strike and to hold a company at ransom until you get what you want. The mining companies understand the language of illegal strikes and force, which means we must reconsider our approach to negotiations,” NUM spokesman Lesiba Seshoka said.
In its offer, Lonmin agreed to a R2 000 bonus for employees to return to work and increases of between 11 percent and 22 percent for employees in category 3 to 8 bargaining units from October. The increases include the 9 percent to 10 percent rise that was previously agreed on.
“The company will update the market on the wider implications of the agreement, including its financial impact, in due course,” it said on Tuesday.
It is estimated that Lonmin lost R1 billion in revenue, while it revised its sales guidance for the year from 750 000 saleable ounces of platinum to between 685 000 to 700 000 ounces because of the strike. BIG PERKS for top management and worker intimidation were criticised by Public Enterprises Minister Malusi Gigaba yesterday, who said that a compact needed to be signed to ensure the proper functioning of South Africa’s massive infrastructure build programme.
Addressing the Cape Town Press Club, Gigaba said that the government was having discussions with Eskom – where recent worker disturbances halted work at the Medupi power plant project – and with the contracting construction companies on how to manage the consequence of the temporary contracts of workers coming to an end.
With about 600 workers on the site having been laid off already, a further 17 000 are expected to be retrenched at various stages by the end of next year, when the Medupi coal-fired plant starts to feed into the electricity grid.
“We are likely to have a summit between Eskom, labour and business… all the stakeholders involved including municipal governments to discuss how we manage this process… what we put on the table to ensure that at the end of the contracts… [it] does not become a disruptive process.”
He said unions had assured the government that destruction of property in Limpopo, including buses which ferried workers to the Medupi plant, had not been carried out by the striking workers. Nevertheless, there could be a high cost associated with the recent strike triggered by the laying off of 600 contract workers.
He also lashed out at management and board members of state-owned companies who were being dished out perks that did not match the performance of the companies. It was a clear reference to Eskom.
“Executive salaries are unsustainable… they cannot be allowed to escalate without any concerns for inequality and for the gap between the executives and the people at the bottom. We need to breach the gap.
“If we allow that situation to carry on we are likely to have a lot of social instability; people want to know that the system is moral and fair.”
What made some executive pay packets “extravagant” was the “perks that were attached to them”, he said, noting it was envisaged that “an executive remuneration panel” would in future provide guidelines for parastatal executive pay.
He said a compact was needed between business, the government and labour to ensure that the R850 billion build programme proceeded “as expected” and was completed on schedule.
Buy-in from workers and business was required.
Meanwhile, he reported that about 13 000 of the 17 000 workers at Medupi were “on site” by Tuesday afternoon. – page 5