WAGE NEGOTIATIONS IN THE MINING INDUSTRY AND THOUGHTS ON A NATIONAL MINIMUM WAGE

WAGE NEGOTIATIONS IN THE MINING INDUSTRY AND

THOUGHTS ON A NATIONAL MINIMUM

WAGEMr Bheki Sibiya: Chief Executive Dr Elize Strydom: Senior

Executive: Employment Relations20 September 2014

OUTLAY OF PRESENTATION

• An introduction to the Chamber of Mines

• Wage negotiations in the Gold mining industry

• Thoughts on a national minimum wage

AN INTRODUCTION TO THE CHAMBER OF MINES

• Registered Employers’ Organization

• Key functions are advocacy & lobbying in respect of collective interests of its members

• Also render certain services such as wage negotiations for Gold & Coal members

• The Chamber has 72 members and represent about 90% of mining production in South Africa

OVERVIEW OF MEMBERSOther commoditiesASA MetalsASPASAClay Brick AssociationCorobrikDeilmann Haniel (Redpath)Delta MiningG&W Base and Industrial MineralsImerys South AfricaMurray & Roberts CementationPPCRandgold & ExplorationSA Mining Contractors’ AssocShaft SinkersVametco Mineral CorporationSome new membersJindalVMCILRiversdaleVergenoeg Mining Tshipi e NtleGiyani Gold

Financial corporationsAnglo American CorpAfrican Rainbow MineralsBHP BillitonMvelaphanda ResourcesRio Tinto (Richards Bay Minerals)Coal mining Anglo Coal Division BHP Billiton Energy Coal Coal of Africa Continental CoalExxaroJindal MiningKangra Group Kuyasa Mining Optimum CoalSasol Mining SiyandaTotal CoalTweewaters Fuel Umcebo MiningGlenocore CoalChrome MiningSamancor ChromeGlencore Alloys

Diamond miningDe Beers ConsolidatedNamakwa DiamondsPetra DiamondsSA Diamond Producers Organisation (SADPO)Trans Hex GroupGold miningAngloGold AshantiDRD GoldGold FieldsHarmony Gold MiningSibanye GoldRand UraniumIron OreKumba Iron OrePlatinum miningAnglo American PlatinumImpala PlatinumLonmin PlatinumNorthamRoyal Bafokeng PlatAquarius Platinum

Key issues on the radar screenld

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Mining industry

challenges

• Charter compliance audit• 10 year target 2014• Charter post 2014

TransformationIssues

EconomicIssues

• Growth strategy for the mining sector Competiveness of the mining industry

• Taxation review• Beneficiation• Infrastructure Dev.• Energy• NDP• MPRDA Amendment Bill• License challenges

EnvironmentalIssues

• Waste Act,

Protected areas,

etc.• Water issues• Carbon tax

Safety Issues

• Centre of Excellence • Safety performance • Culture Transformation• Section 54s• Elimination of Fatalities

Health Issues

• Compensation for Lung Diseases (ODMWA, COIDA)• TB, HIV/AIDS

Labour relationsIssues

• Wage negotiations obo Gold & Coal members•Implementation of wage agreements•Explore central level negotiations for Platinum•Represents Chamber in BUSA & NEDLAC iro labour market issues

Skills Development

Issues

• Training in H&S• Artisan training• FET’s• Skills Bills

SustainableDevelopment

Issues

• JSE Integrated Reporting

• SLP performance• Community development

• Migrant labour• Supporting local government

WAGE NEGOTIATIONS IN THE MINING INDUSTRY: GOLD

• Central level negotiations under auspices of COM• Bargaining unit: Cats 4-8, Miners & Artisans, &

Officials (90 000 employees)• Access by unions to negotiations not only

determined by representivity• Currently 4 unions: NUM, AMCU, UASA &

Solidarity• Negotiated a 2-year agreement in 2013 which

will expire June 2015

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• Wage increases to address wage inequality

– Minimum wage/entry level wage for surface & underground work

– Consistently higher % increases at entry level than for other categories of employees to close the wage gap

– Over past decade, average basic wage increases always above CPI

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• Wage increases to address wage inequality (cont)

– Have “rolled up” job categories where circumstances dictated it - entry level employees moved to a higher job grade level with linked wage increases

– Provision that contractors must offer their employees wages & other terms & conditions that are “similar” to those offered by mines to their employees

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• Introduction of benefits to address inequality– Retirement – Mineworkers Provident Fund (MPF)

• Established after 1987 Gold strike• Employer contribution 15% of basic & employee 8% of

basic

– Health care & medical aid• Free health care for employee; or• Medical aid for employee, spouse & children

– 50:50 co-contribution– 60% contribution by company if first time member

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• Addressing legacy issues to address inequality

– Introduction of the Living-out Allowance– Working on housing, including home ownership– Working on transforming the migrant labour

system– Working on addressing employee indebtedness

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BREAKDOWN OF GUARANTEED PAY IN GOLD

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Entry level employee

Rock Drill Operator

Category 8

Basic wage 5 787 7 424 9 102

Provident 865 1 110 1 361

Medical 982 982 982

Housing allowance

2 000 2 000 2 000

Holiday leave allowance

482 619 758

Average overtime

1 430 1 056 2 079

Average bonus

1 212 2 074 847

Total average 12 758 15 265 17 129

Annual 153 096 183 180 205 548

THOUGHTS ON A NATIONAL MINIMUM WAGE

• Appreciate the value of a minimum wage to address income inequality

• It should be explored collectively by all stakeholders & some of the issues which will have to be considered/taken into account are:

– What is meant by a minimum wage?

– A minimum wage is but one of a range of mechanisms to address inequality

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THOUGHTS ON A NATIONAL MINIMUM WAGE (cont)

– A “one size fits all” i.e. a national minimum wage across all industries might not be appropriate as it will not necessarily take into account realities within different industries such as:

• skills levels required, • geographic spread,• labour intensiveness, • size of businesses, and• economic realities of that industry

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– For the same reasons, a national minimum wage for an industry as a whole & with no distinction between different sectors of that industry might also be inappropriate (eg mining & chemical sectors)

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– The knock-on effect on wages of employees in higher job categories

– It should be pegged at a level which does not threaten jobs, undermine the sustainability & competitiveness of a business & leads to informalisation

– It should be pegged at a level which does not undermine the actual creation of jobs

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– Difficulty of enforcing, particularly in the informal sector

– What about existing minimum wages determined

through voluntary collective bargaining (e.g. bargaining council agreements)?

– What about existing sectoral determinations made by the Minister of Labour in respect of vulnerable sectors (e.g. domestic workers, farm workers, private security, contract cleaning, taxi drivers, retail)?

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CONCLUDING REMARKS

• The issue is complex but, in the spirit of putting South Africa first & finding ways to address inequality, it should be explored collectively by the stakeholders

• The Chamber (as part of BUSA) looks forward to participating in the Deputy President’s Labour Indaba in November where this issue will be debated

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THANK YOU

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Documents

WAGE NEGOTIATIONS IN THE MINING INDUSTRY AND THOUGHTS ON A NATIONAL MINIMUM WAGE