South African Coal Miners Strike Could Worsen Economic Downturn
Decline in prices for exports has contributed to negative growth and wage stagnation
By Abayomi Azikiwe
Editor, Pan-African News Wire
30,000 South African workers in the coal industry downed their tools on October 4 over a wage dispute.
This strike was organized by the National Union of Mineworkers (NUM), a key affiliate of the Congress of South African Trade Unions (COSATU), which is an ally of the ruling African National Congress (ANC) party.
NUM has blamed the mining firm bosses for the failure to reach an agreement acceptable to their rank-and-file members. The owners submitted another offer on October 9 after negotiations had broken down the day before.
According to Peter Bailey, the chief coal negotiator for NUM, "This morning, when we were supposed to reconvene, there was one outstanding company which has done nothing and that is Glencore. They are the ones holding the whole process to ransom.” (Reuters, Oct. 9)
Reuters in the same above-cited article noted in the disagreements between the workers and the bosses that “The Chamber of Mines said last week that coal producers had offered to increase wages by up to 8.5 percent for the lowest paid workers, up from a previous offer of 8 percent. The NUM has rejected both offers. The union had been seeking a 50 percent rise for its lowest paid workers, who make about 6,000 rand ($445) a month in basic pay, but has since scaled that back to a demand of 1,000 rand, or an increase of about 17 percent.”
The workers have walked off the jobs at mines run by Glencore, Anglo American, Exxaro and some smaller producers, which has threatened supplies of coal to the government-run power utility Eskom. South Africa, the most industrialized state on the continent, has been plagued by power shortages. Not only does the economy rely heavily on coal for its power generation, South Africa is a major exporter to Europe and Asia.
Mine owners are concerned that a prolonged strike could further drive down their profits and create even greater economic problems. The country has experienced negative growth over the last quarter negatively impacting the value of its currency, the rand, and the capacity to address the imperatives of job creation, power generation and housing construction.
South African Business Day Live website noted “A resolution to the standoff on a two-year wage agreement would be good news for coal companies, whose margins are being squeezed by weak global coal prices, and for SA in general, as it would help to stave off the possibility of load-shedding. Eskom has said it has enough stockpiles for its coal-fired power stations to withstand a one-to-two-month strike but not if the strike lasted longer.” (October 12)
Two other traditionally white-dominated unions in the coal sector, Solidarity and the United Association of South Africa (UASA), had accepted the owners offer on September 14. Nonetheless, NUM represents 72 percent of the workers in the coal mines with their membership being predominantly African.
In a statement issued by Motsamai Motlhamme, the director of Employment Relations of the Chamber of Mines stressed that "The coal producers are facing subdued demand and price pressures. The offers we have made are at the limit of what is affordable. Further strike action will continue to undermine the sustainability of the industry and jobs."
The fact that this industrial action is taking place amid an economic slump in South Africa is a cause for concern for the ruling ANC government of President Jacob Zuma. With the decline in commodity prices, South Africa, along with other so-called "emerging economies" are experiencing similar problems due their continuing dependence on the generation of foreign exchange through exports of minerals and oil.
Workers Threaten to Strike in Other Sectors
In addition to the coal sector, another rival labor group, the Association of Miners and Construction Workers (AMCU), is threatening to strike in the gold mines.
On October 11, AMCU took a strike vote at the Sibanye facilities although leaders claim that they will not walk out until negotiating possibilities have been exhausted. AMCU has its largest membership at Sibanye yet none of the unions at the mine have an outright majority.
“Today all the members of AMCU have agreed overwhelmingly that we are prepared to go on a protected strike in pursuit of the living wage at AngloGold Ashanti, Harmony Gold Mining and Sibanye Gold,” the president Joseph Mathunjwa told media outlets in the aftermath of a rally outside Johannesburg on October 11.
He failed however to announce a deadline noting “You need to prepare for a strike.”
Mathunjwa surmised that an immediate strike would seriously divide the work force saying “If we would strike now, we would be divided. Because others will complain that if it’s December, they have to go home. Others will say they have to budget to pay for their children’s school uniform.” (Independent Online, Oct. 12)
NUM, Solidarity and the United Association of South Africa (UASA) signed a three-year pay agreement with AngloGold Ashanti and Harmony on October 2. Nonetheless, AMCU was issued a certificate of nonresolution by the Council for Conciliation, Mediation and Arbitration (CCMA).
Mine owners intend to take legal action against AMCU if they proceed with a strike in an attempt to have any work stoppage declared as unprotected. The lack of a majority representation by AMCU will be the basis for the bosses to win an injunction aimed at forcing their members back to work.
Gold output has fallen 39 percent from a June 2011 high, and the largest firms in South Africa, whose mines’ are the deepest and among the oldest globally, say they are losing money on about 35 percent of production at current price levels.
Platinum Production Declines in Troubled Sector
Also the production of platinum, with South Africa being the world's largest source, has been down overall during the course of the year after rebounding in the troubled sector where strikes have been prevalent since 2012.
In 2014, the longest strike in the history of the mining industry was led by AMCU resulting in the decline in production and consequently contributing to the slowing of growth inside the country. An impasse in the negotiations would take five months to resolve the strike.
It was in the platinum sector that the Marikana strike took place in August 2012 leading to the deaths of over 45 union organizers and workers who were killed in internecine conflicts between supporters of NUM and AMCU, as well as the Northwest provincial police massacre of miners on August 16 of that year, which resulted in the killings of 34 miners and the injuring of many others.
The International Monetary Fund (IMF) recently released its forecast for growth in South Africa saying that there was the potential for a 1.4 percent increase in 2015, revising its previous prediction of 2.0 percent. IMF officials also warned that in 2016, there would be a growth rate of 1.3 percent, revising an earlier forecast of 2.1 percent.
In a World Bank report examining the potential for economic growth in South Africa and throughout the continent as a whole also scaled-back growth figures for 2015 and 2016. For South Africa, the World Bank predicted a growth rate for 2015 at 1.5 percent and 1.7 percent for the following year.
In Africa south of the Sahara, the World Bank is saying that growth rates will be at their lowest point since 2009. Rates for sub-Saharan Africa were forecast to decline from 4.6 percent in 2014 to 3.7 percent for 2015.
The report issued by the World Bank is attributing the sluggish growth to economic problems in China, Africa’s largest trading partner, and also to lower commodity prices, along with electricity supply shortages. Predictions of slower growth indicate that Africa would be the only developing region to fall below the United Nations global poverty reduction goals.
By Abayomi Azikiwe
Editor, Pan-African News Wire
30,000 South African workers in the coal industry downed their tools on October 4 over a wage dispute.
This strike was organized by the National Union of Mineworkers (NUM), a key affiliate of the Congress of South African Trade Unions (COSATU), which is an ally of the ruling African National Congress (ANC) party.
NUM has blamed the mining firm bosses for the failure to reach an agreement acceptable to their rank-and-file members. The owners submitted another offer on October 9 after negotiations had broken down the day before.
According to Peter Bailey, the chief coal negotiator for NUM, "This morning, when we were supposed to reconvene, there was one outstanding company which has done nothing and that is Glencore. They are the ones holding the whole process to ransom.” (Reuters, Oct. 9)
Reuters in the same above-cited article noted in the disagreements between the workers and the bosses that “The Chamber of Mines said last week that coal producers had offered to increase wages by up to 8.5 percent for the lowest paid workers, up from a previous offer of 8 percent. The NUM has rejected both offers. The union had been seeking a 50 percent rise for its lowest paid workers, who make about 6,000 rand ($445) a month in basic pay, but has since scaled that back to a demand of 1,000 rand, or an increase of about 17 percent.”
The workers have walked off the jobs at mines run by Glencore, Anglo American, Exxaro and some smaller producers, which has threatened supplies of coal to the government-run power utility Eskom. South Africa, the most industrialized state on the continent, has been plagued by power shortages. Not only does the economy rely heavily on coal for its power generation, South Africa is a major exporter to Europe and Asia.
Mine owners are concerned that a prolonged strike could further drive down their profits and create even greater economic problems. The country has experienced negative growth over the last quarter negatively impacting the value of its currency, the rand, and the capacity to address the imperatives of job creation, power generation and housing construction.
South African Business Day Live website noted “A resolution to the standoff on a two-year wage agreement would be good news for coal companies, whose margins are being squeezed by weak global coal prices, and for SA in general, as it would help to stave off the possibility of load-shedding. Eskom has said it has enough stockpiles for its coal-fired power stations to withstand a one-to-two-month strike but not if the strike lasted longer.” (October 12)
Two other traditionally white-dominated unions in the coal sector, Solidarity and the United Association of South Africa (UASA), had accepted the owners offer on September 14. Nonetheless, NUM represents 72 percent of the workers in the coal mines with their membership being predominantly African.
In a statement issued by Motsamai Motlhamme, the director of Employment Relations of the Chamber of Mines stressed that "The coal producers are facing subdued demand and price pressures. The offers we have made are at the limit of what is affordable. Further strike action will continue to undermine the sustainability of the industry and jobs."
The fact that this industrial action is taking place amid an economic slump in South Africa is a cause for concern for the ruling ANC government of President Jacob Zuma. With the decline in commodity prices, South Africa, along with other so-called "emerging economies" are experiencing similar problems due their continuing dependence on the generation of foreign exchange through exports of minerals and oil.
Workers Threaten to Strike in Other Sectors
In addition to the coal sector, another rival labor group, the Association of Miners and Construction Workers (AMCU), is threatening to strike in the gold mines.
On October 11, AMCU took a strike vote at the Sibanye facilities although leaders claim that they will not walk out until negotiating possibilities have been exhausted. AMCU has its largest membership at Sibanye yet none of the unions at the mine have an outright majority.
“Today all the members of AMCU have agreed overwhelmingly that we are prepared to go on a protected strike in pursuit of the living wage at AngloGold Ashanti, Harmony Gold Mining and Sibanye Gold,” the president Joseph Mathunjwa told media outlets in the aftermath of a rally outside Johannesburg on October 11.
He failed however to announce a deadline noting “You need to prepare for a strike.”
Mathunjwa surmised that an immediate strike would seriously divide the work force saying “If we would strike now, we would be divided. Because others will complain that if it’s December, they have to go home. Others will say they have to budget to pay for their children’s school uniform.” (Independent Online, Oct. 12)
NUM, Solidarity and the United Association of South Africa (UASA) signed a three-year pay agreement with AngloGold Ashanti and Harmony on October 2. Nonetheless, AMCU was issued a certificate of nonresolution by the Council for Conciliation, Mediation and Arbitration (CCMA).
Mine owners intend to take legal action against AMCU if they proceed with a strike in an attempt to have any work stoppage declared as unprotected. The lack of a majority representation by AMCU will be the basis for the bosses to win an injunction aimed at forcing their members back to work.
Gold output has fallen 39 percent from a June 2011 high, and the largest firms in South Africa, whose mines’ are the deepest and among the oldest globally, say they are losing money on about 35 percent of production at current price levels.
Platinum Production Declines in Troubled Sector
Also the production of platinum, with South Africa being the world's largest source, has been down overall during the course of the year after rebounding in the troubled sector where strikes have been prevalent since 2012.
In 2014, the longest strike in the history of the mining industry was led by AMCU resulting in the decline in production and consequently contributing to the slowing of growth inside the country. An impasse in the negotiations would take five months to resolve the strike.
It was in the platinum sector that the Marikana strike took place in August 2012 leading to the deaths of over 45 union organizers and workers who were killed in internecine conflicts between supporters of NUM and AMCU, as well as the Northwest provincial police massacre of miners on August 16 of that year, which resulted in the killings of 34 miners and the injuring of many others.
The International Monetary Fund (IMF) recently released its forecast for growth in South Africa saying that there was the potential for a 1.4 percent increase in 2015, revising its previous prediction of 2.0 percent. IMF officials also warned that in 2016, there would be a growth rate of 1.3 percent, revising an earlier forecast of 2.1 percent.
In a World Bank report examining the potential for economic growth in South Africa and throughout the continent as a whole also scaled-back growth figures for 2015 and 2016. For South Africa, the World Bank predicted a growth rate for 2015 at 1.5 percent and 1.7 percent for the following year.
In Africa south of the Sahara, the World Bank is saying that growth rates will be at their lowest point since 2009. Rates for sub-Saharan Africa were forecast to decline from 4.6 percent in 2014 to 3.7 percent for 2015.
The report issued by the World Bank is attributing the sluggish growth to economic problems in China, Africa’s largest trading partner, and also to lower commodity prices, along with electricity supply shortages. Predictions of slower growth indicate that Africa would be the only developing region to fall below the United Nations global poverty reduction goals.
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