by Stef Terblanche

Battle for union dominance continues

Labour puts mining sector under siege

the fight for mine union dominance threatens to turn wage negotiations into a costly cycle of radical demands
Strike season.jpg

The violent turf wars between rival mining unions in South Africa continue to strangle the platinum sector. Now the fight for dominance threatens to turn wage negotiations in the gold and coal sectors into a costly cycle of radical demands as the unions try to outdo one another.

Mining companies themselves, politics and South Africa’s problematic industrial relations dispensation continue to add destabilising pressures.

Mining companies will find themselves in unfamiliar territory when they engage for the first time with the Association of Mineworkers and Construction Union (Amcu) in the two-yearly wage negotiations set to start in mid-June.

With Amcu having established dominance in the platinum sector and a growing presence in the gold sector, and with the National Union of Mineworkers (NUM) determined to fight back, the wage talks are set to become volatile and unpredictable.

Despite Amcu’s stalling, talks continue in the platinum sector to establish a central bargaining structure following last year’s labour unrest in the sector. It is uncertain whether Amcu will participate in central bargaining in the gold and coal sectors where such structures already exist.

There is serious concern that the bitter and bloody rivalry between Amcu and the NUM will trigger excessive and radical demands, with each trying to outdo the other. NUM has already fired the first shot with an unprecedented demand for up-to-60% pay rises.

Anxious to avoid losing ground to Amcu, as it did in the platinum sector, the NUM is keen to show its gold and coal members that it is still their radical champion. It further promises to introduce high levels of militancy into negotiations.

Markets have already responded, with the rand taking a dive after the news of the pay demands and threats of more strikes.International credit rating agencies have indicated they are watching developments closely.

While unions have previously opened negotiations with excessive demands, only to settle much lower, there are fears that this year NUM will take a tougher stand in an attempt to avoid more defections to Amcu. Mining companies believe there is a high potential for more strikes.

The strike risk was further increased by planned restructuring at Anglo American Platinum (Amplats), which will see 6 000 workers being retrenched. The restructuring is a direct consequence of weak market conditions, escalating costs and last year’s labour unrest and violence.

Initially, Amplats had said it would retrench up to 14 000 workers, but revised its restructuring plans under pressure(Please link to Business environment article) from government and the unions. Both the NUM and Amcu have nevertheless threatened strike action if the restructuring went ahead.

Meanwhile, platinum mining companies say they cannot afford wage increases. After a decade of above-inflation increases, labour costs account for more than 50% of total expenditure and have become unsustainable.

The situation is dire and can only worsen while the union battle for dominance continues. Amcu and NUM are likely to ignore the economic realities and push for ever higher wages.

Yet Lonmin, whose Marikana mine was among the hardest hit by last year’s unrest, recently reported a strong recovery in its interim production results, announced by acting chief executive, Simon Scott.

The company said it had settled all its debts, its balance sheet “is robust”, had $194 million (R1.8bn) in cash, had increased its pre-tax profit for the six-month period, and had increased production expectations for platinum metals in concentrate to more than 700 000 ounces for the full year. Unions are expected to use these figures to justify their wage demands.

Unlike the NUM, Amcu has yet to submit its wage demands. In the absence of a central bargaining structure in the platinum sector, negotiations in the sector take place on a company-to-company basis. This raises the prospect of unions forcing a lucrative settlement at one mine and expecting others to match it.

In the interim, the NUM’s desperate battle for survival against Amcu on the platinum mines could again trigger more violence and strikes.

After three decades of total dominance, the NUM recently suffered massive defections to Amcu as workers lost faith in the union and its officials amid growing accusations of self-enrichment and corruption. Such internal issues caused an illegal strike at a Rustenburg chrome mine just last week.

But the NUM is reluctant to budge and in some sub-sectors is still protected by unbalanced labour legislation passed by the ANC government and political ally of NUM’s parent federation, the Congress of South African Trade Unions (Cosatu). Particularly problematic is the exclusive recognition for a union with 50 plus 1 percent of workers’ support, which gave an unfair advantage to Cosatu-affiliated unions across all sectors.

The NUM is still the biggest union in Cosatu and is a pivotal power broker within the Cosatu faction that backs President Jacob Zuma in the ANC and the alliance. Therefore, despite widespread calls for a review of labour laws that could ease the tensions in industrial relations, the government is unlikely to act.

However, as the fight over the NUM’s exit from Lonmin’s Marikana operation – vacating offices, among other things – continued this past week, it was frantically clutching at straws to delay it further.

Both unions had been party to an agreement last year, setting organisational rights thresholds of 30% membership at the mine. Amcu, with around 70% membership, has accused Lonmin of siding with the NUM, which has around 20% membership, in trying to bring the threshold down to 10%. That would allow the NUM to maintain an organisational presence at the mine.

But following the recent two-day strike, the murder of an Amcu regional organiser and what is thought to be the revenge killing of two brothers connected to a NUM official, Lonmin management has now brought forward the date when the NUM has to vacate its offices at the mine – from July to the end of May.

It has become a cat-and-mouse game in a very volatile situation.

But the issues go much wider than just the mining sector. A core issue increasingly coming to the fore is the question of how government can be expected to be a neutral broker in this volatile situation while it is in a formal political alliance with one of the parties involved.

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