Inside Labour: Strikes show SA could be heading for a social catastrophe

2014-07-02 10:00

The South African economy is facing a rocky period. But don’t blame the platinum strike, the unions or the workers involved.

That labour dispute was a symptom, not the cause, of problems that developed outside of the workers’ control.

Since labour is a major cost factor, it is the pay and conditions of workers that come under pressure whenever there is an economic crisis. And the only protection workers have is to organise because without labour, there can be no production and no profit.

In this sense, trade unions are products of an essentially exploitative system and they exist to provide a more humane balance to that system.

Now that the strike is over, with declarations across the board that lessons have been learnt, there is no room for complacency.

But the ending of the dispute does not signal the turning of any corner economically. In fact, if all the powers that be do not develop innovative ideas, followed by radical action, we could be heading, via further crises, to a social catastrophe.

Unlike natural catastrophes such as earthquakes, social catastrophes are usually the culmination of a series of avoidable crises that develop over time. The situation in the platinum belt – from the Marikana massacre in 2012 to the five-month-long strike this year – provides a classic example.

Of course, in the immediate wake of the strike this week, there were celebrations on many fronts and the rand even rallied as currency dealers took a slightly more optimistic view of South Africa.

But all the underlying problems that created the crisis in mining remain in place. Ongoing global economic instability also makes matters potentially much worse.

Migrant labour remains a reality, as do problems of housing and health. But it is deteriorating market conditions that hang like a sword of Damocles over the sector. And reactions to this could determine whether or not a serious social catastrophe can be avoided.

It is certainly not the miners, whether striking or not, who were to blame for the fact that government handed out perhaps too many mining rights, resulting in a potential glut in platinum production.

Nor can they be held responsible for the fact that the commodities boom between 2001 and 2008 saw a disproportionate share of profits going – mainly abroad – to shareholders and directors.

Government and the companies involved should have also been fully aware that recycled platinum would, sooner or later, begin undermining demand and prices. This because the main use of platinum is as a catalyst in the car industry, which means it can be constantly reused.

As I’ve previously noted in this column, more than 2?million ounces a year are already coming to market.

This is happening during an ongoing global economic crisis, with a declining demand for vehicles. At the same time, the cheaper option, palladium, can be used as a substitute for platinum in the autocatalyst sector. And Russia provides more palladium to the market than South Africa does.

This situation, in the absence of any innovative programmes and radical action, could mean a decline in the platinum price and the profitability of various shafts which, in turn, could result in large-scale retrenchments.

The gold sector, so far not directly involved, is also in the line of fire because gold – perhaps even more so than platinum – can be subject to extreme price volatility. So neither gold nor platinum, within the present arrangements, provide safe havens or any security for the domestic economy.

But if thousands of miners are retrenched because of circumstances beyond their control, this will trigger what can only be described as a social catastrophe. By most estimates, every miner supports between eight and 10 dependants, mainly in rural areas, primarily in the Eastern Cape.

In such circumstances, it will again be the poor who will suffer most. Without income from migrants, millions more hungry and desperate men, women and children will inevitably drift, in hope, to urban areas where infrastructure is already inadequate and jobs for the unskilled are virtually nonexistent.

This is a future scenario that is best avoided.

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