NGOs’ facts are wrong

2014-06-16 10:00

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Are mines overplaying their financial woes, or is the increase really unaffordable? Here are some of the arguments


In the past two weeks we have seen the publication of research reports by two NGOs who believe the R12 500 basic wage demand from the Association of Mineworkers and Construction Union (Amcu) is affordable. Regrettably, these reports – rather than improving the debate – have reinforced some of the misinformation that persists.

They wrongly argue:

»?“The companies (combined) have undersold their product over the past 10 years by R15 billion, and if they hadn’t there would be money available to pay the wage.”

That includes, allegedly, a R2.8?billion under-recovery by Impala Platinum (Implats). Unfortunately, the Alternative Information and Development Centre (AIDC) reached this conclusion by using incorrect data on actual platinum group metal (PGM) market prices. The centre’s research indicates it used a private website that does not reflect actual spot prices.

Implats has now revised AIDC’s calculations using official spot price data. Over the 10 years, the company gave discounts of $85?million (R910?million), representing just 0.29% on total revenue of $29?billion. Long-term and large customer contracts naturally include discounts. This is a modest shortfall, mostly attributable to the extremely volatile rhodium market of 2007/08.

»?“Companies may be in a tight financial situation now, but they and their shareholders scored big during the 2000-2008 bull market, while workers and the state gained little or nothing. So, overall, they should be able to afford the R12 500 increase.”

Yes, but it is equally true that shareholders have not fared well during the period 2009-2014 and have, in fact, contributed more to the companies than they have received.

Also, it would be a mistake to link basic wages to either PGM prices or share prices. That would mean volatile wages and hiring. Instead we have seen a gradual increase in real wages over the period of collective bargaining – surely preferable.

Nonetheless, we accept we all need to do some thinking about how employees might benefit during bonanza years. We believe the answer lies in profit-sharing arrangements.

»?The AIDC further claims some workers were earning as little as R3?300 a month in 2012. But on a gross total cash-remuneration basis, the minimum paid to an underground employee was more than 2.6 times that.

We are aware some workers take home pitifully small amounts, due to garnishment orders and contracts with dubious lenders. Our companies, both individually and through the Chamber of Mines, remain focused on challenging illegitimate garnishment orders, challenging the institutions that put workers into debt through irresponsible lending, and engaging government with a view to appropriate legislative amendments. We would very much like to work with representative unions on these matters.

»?“The R12 500 demand is a mind-set issue.”

This is correct. And it is why it has been impossible to engage in real negotiations. Employers sought to find a way to give the R12?500 number meaning by refining aspects of total cash remuneration and other techniques. But we have had to remain within the bounds of what is affordable.

At Implats, the minimum underground basic monthly wage until June 2013 was R5?500. Including various allowances, the guaranteed cash remuneration was R7?800. Our offer since early in the strike would take this above R12?500 by 2017.

Add existing performance-related bonuses and prospective new ones and one sees a reasonable package.

Sangqu is group executive for sustainability and risk at Impala Platinum

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