News announcements about strikes are becoming so common placed that few people pay much attention to it. Who could blame you? Unfortunately, with the mining strikes picking up steam again, South Africa’s economy is taking a hit. So what cause is there for real alarm and what do we need to do to overcome the challenges?
Repeated productivity losses from strikes have a ripple effect through the economy. Strikes come at a cost to some, or all, involved - a cost that is felt in financial, social and other terms. Sometimes, if concluded quickly, it may bring benefit to the striking workers and benefit the broader economy by raising the spending power of the lower paid. In other cases, they come at a cost to all sides and to the wider economy. The current strikes in South Africa's mining sector come at a bad time for a country whose currency breached a five-year low against the U.S. dollar.
Experts said that if mine owners did accede to the demands there would ultimately be job losses, especially in South Africa's platinum sector. This is because, at the current price of about 1,446 U.S. dollars an ounce, platinum production is barely viable.
In July 2013, government formed a mining task team – comprising mining unions and the Chamber of Mines and spearheaded by Deputy President Kgalema Motlanthe – which aimed to resolve the challenges faced by the industry. This agreement however, seemed to hold little weight as 2014 started with another wave of strikes.
A recent paper by the South African Institute for International Affairs (SAIIA) offers some recommendations for resolving costly labour disputes. A revenue-sharing model that limits wage increases and incentivises productivity could be the solution. Wage increases should be linked to inflation, and approximately 20% of each company’s profits should be made available for distribution, weighted in favour of low-skilled workers. This is hardly a new idea, it was part of negotiations between mines and unions in 1990 – 1994, but was never followed through on.
Another solution according to Gavin Hartford, an industrial sociologist, could be to relook at the pattern of migrant labour. Currently workers only have a break between Christmas and New Year in 12 months. A more humane approach would be to look at 3-4 month work cycles, which would allow workers to travel home to family, increase cash flow to rural poor and enhance attendance.
If continuous strikes are to be avoided, novel solutions have to be found. We can no longer afford to ignore the issue and hope it will drift off the agenda. It is imperative that, if the country’s mining houses want to make themselves attractive in this highly competitive global arena, that concerted effort be made in boosting their investment appeal. It is not just a mining industry problem but this affect the country’s economy and our collective wellbeing.
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