Sunday, September 04, 2011

Gold Miners' Strike in South Africa

BBC: South Africa's Gold Miners Begin Strike Over Pay
Bloomberg: Mine Nationalization in South Africa is a Concern
Financial Times: South African Gold Miners Strike
Financial Times: Strikes Spread in South Africa's Mining Sector
Main & Guardian: Talks Aim to End SA Coal, Gold Sector
MarketWatch: Miners End South Africa Gold Strikes with Wage Deal

South Africa, Africa’s largest economy, has recently faced a series of strikes in its mining sector. In late July, gold miners began a strike after the National Union of Mineworkers (NUM) rejected an offer of a seven to nine percent wage increase from mining companies, including AngloGold Ashanti, Gold Fields, and Harmony. Though the national inflation rate is around five percent, the NUM had been asking for a fourteen percent increase in wages. The NUM justified the high demand by arguing that workers should have “something to show” for the dangerous work they do.

Strikes have plagued South Africa’s mining sector lately, with coal and diamond miners staging separate strikes as well. While admitting that workers deserve decent wages to support themselves and their families, mining companies are concerned about their own ability to compete globally. Increased labor costs, along with rising energy prices, and threats of nationalization have dented the mining sector’s profits in recent months by increasing production costs and scaring off investors. However, mining companies understand that retaining an already-trained workforce is important to maintaining high productivity levels. Large wage increases could, therefore, be in the companies’ best interests in the long run.

Many observers believe the root cause of the strikes is much deeper than a simple desire for higher wages in the face of a higher cost-of-living. Some believe that mounting frustrations about social and economic inequality are pushing the working class to demand a larger share of national wealth. Racial undertones accentuate South Africa’s inequality. Only seventeen years removed from government-approved segregation, whites still own most mines, while the vast majority of mine workers are black.

After almost a month of striking, the NUM and the gold-mining companies reached a two-year agreement to get the miners back to work. The agreement includes an eight percent increase each year. The NUM also successfully lobbied for a provision guaranteeing it the right to re-negotiate a higher wage increase if the rate of inflation rises. Economists estimate that the gold miners’ strike alone resulted in $200 million in lost revenue for the mining sector, which will likely have a negative impact on South African economic growth for the year. South Africa can only hope that such costly strikes become less common as it continues to develop.

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