Platinum mining job cuts inevitable with new wage offer - SA analyst

April 22, 2014

Johannesburg-S.A. (Apr 22)  The new wage offer by Anglo American and Impala Platinum to striking workers in South Africa is destined to lead to job losses, a labour analyst told Mineweb.

In an interview Michael Bagraim, a labour law analyst who is following the platinum wage negotiations closely, said the latest offer should serve as a wakeup call to the Association of Mineworkers and Construction Union (AMCU).  Bagraim said the higher wage now on offer would, if it goes into effect, result in hefty job cuts by Anglo American Platinum at some of its SA platinum operations.

“They have opened their books and made offers that they can ill afford. And they will cut down the numbers of staff. We will see about 30% retrenchments of staff,” he estimated.

While Anglo American could not immediately be reached for comment on the issue of job cuts, last week it noted in statement that they could "ill afford" the wage increase. It is not clear if that means possible job cuts.

The companies have offered wage increases for entry level underground workers of between 7.5% and 10%, which would see a cash remuneration including benefits reach R12,500 by 2017.

According to Anglo American Platinum, “by implementing these increases by July 2017, the cost to company for the lowest paid underground employee would be in excess of R 17,500 per month.”

The cost to company includes cash remuneration, medical aid, retirement, overtime and bonus provisions.

The AMCU is demanding a R12,500 basic wage increase from the current average of around R5000. Basic wage is the main component of cash remuneration. The trade union was not available for comment at the time of publishing.

According to Bagraim, it is highly unlikely that the union will accept the offer as they will continue to want more in terms of basic wage.

When asked by Mineweb if the AMCU might still push the envelope for a higher wage given recent concessions by the platinum miners - that is, seeing the concessions as a sign of weakness - Johan Theron, an executive director at Impala Platinum admitted there was that risk.

But he was of the view it was balanced by the fact the current offer is positioned as a settlement offer after a very long and costly stoppage.

When pressed if this meant that the companies would continue giving further concessions as a result of this settlement offer, Theron said: “Certainly not."

He added, "It should be seen for what it is, an honest and well-intended attempt to secure a compromised negotiated settlement to preserve jobs as far as possible by bringing this debilitating strike to an end.”

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