Unlike the gold industry, which pursues centralised collective bargaining, wage negotiations in the platinum industry take place at a company level. Unions therefore present their demands to each individual company, and meetings are held directly between unions and companies.
But, while the negotiations take place at a company level, the context in which the producers operate and many of the conditions of service are similar across companies.
The previous wage agreements were in effect until the end of June 2019. The new agreement will be in effect from 1 July 2019.
Demands from unions were received in July 2019, and the first engagements with unions took place in July. There is no set time period for negotiations to conclude, although it is the companies’ hope these could be concluded as soon as possible.
In terms of the Labour Relations Act and various Labour Court judgments, a registered trade union that is “sufficiently representative” of employees at an employer’s workplace is entitled to seek organisational rights.
Organisational rights include the right of trade union representatives to have access to an employer’s premises, deduction facilities for trade union subscriptions, shop steward leave for trade union activities, the right to negotiate wages and conditions of employment and the majority union is entitled to disclosure of information. Thus, to be recognised means that a trade union is entitled to these basic organisational rights. Should an employer refuse to grant these rights, the trade union can either strike to obtain these rights or approach the CCMA to be granted these rights.
The Labour Relations Act (LRA) does not prescribe a minimum level of representation to be granted organisational rights, just that a union should be sufficiently representative. Business organisations have different thresholds to determine what should be deemed as sufficiently representative. Further, through collective bargaining a registered trade union may demand other rights such as full-time representatives, offices, transport, etc.
The LRA requires that to qualify for representation, the union must be registered with the Department of Labour.
Union representation differs at each of the companies as follows:
|Number of employees||27,367||3,252|
|Number of employees||11,316||22,511|
*Kroondal is not included in the above table
There are several demands common to both companies for the 2019 wage negotiations:
Category A and B: an increase of R1 500 per year, over a 3-year agreement; and
Category C and D1: an increase of 10% per year, over the 3 years.
Unaffordable increases will lead to job losses and mine closures. Unaffordable increases will harm the industry, employees and South Africa’s economy, which is already battling a 29% unemployment rate.
While the palladium and rhodium prices have boosted the PGM basket price and subsequently company earnings in the past six months, this comes after several years of losses caused by depressed prices, increased costs, disruptions to production and labour unrest.
As a result, there have been years of under investment in capital, in some cases leading to mine closures. Now that profits have increased, the companies need to invest in the sustainability of the industry to preserve jobs in the long term, instead of embedding unsustainable wage increases into the cost base of their businesses.
Shareholders make a financial investment into a company. They do this using their own funds and are in effect a company's “owners”. This comes with an element of risk. If a company loses money and its share price drops, shareholders lose money. If a company is profitable, they reap the benefits in the form of dividends.
For the past 12 years, dividends paid to shareholders have been minimal, often zero. This graph shows the relationship between wages paid, on the one hand, and profits and dividends on the other, for the South African platinum sector.
* NPbDT stands for net profit before depreciation and tax and is a measure of a company's overall financial performance
PGM mining is a price taking industry – meaning that the price of the metals is set by the market. Price is determined based on many things, including supply and demand and sentiment. Producers cannot pass on increased costs to the market. In South Africa, domestic cost pressures exceed platinum price improvements.
Sibanye-Stillwater and Impala Platinum reached three-year wage settlements with AMCU in late 2016, effective from 1 July that year. Those agreements were reached without any industrial action. The period since then has been extremely tough, with costs rising faster than the stagnant or declining price. It was only earlier this year when the prices of some PGMs, including palladium and rhodium, began rising.
The minimum wages in the platinum sector, at close to R11,000 a month compare extremely well with those in other industries. Basic entry-level wages in mining also compare well to white collar salaries such as in nursing and the SAPS.
|Metals and Engineering||R7,840|
|Construction (Project Labour Agreements – PLA’s)||R7,628|
|Road and Freight Logistics Industry||R5,816|
|Motor Industry Bargaining Council||R5,396|
|Agricultural Sector (Farm workers)||R3,169 (1)|
(1) Gazetted minimum wage
(2) Median teachers’ salary
AMCU has not historically been in favour of centralised bargaining, though – as suggested by its media statements – it does appear to co-ordinate its approach to negotiations with the companies.
The fact that average real wages have increased in real terms by 5% a year since 2008 is a sign of consistent positive change in this regard, sometimes to an extent beyond what the industry has been able to afford.
The industry will seek to continue to grow. There naturally are trade-offs between wages and employment and this is a matter which needs to be addressed jointly by business, unions and government.
However, there are several other ways in which the industry is tackling South Africa’s unemployment crisis, including extensive skills training initiatives (for both mining-related and portable skills) so employees are able to grow their careers within the industry and beyond – in industries unrelated to mining.
In terms of the Mining Charter, companies are required to target higher levels of procurement expenditure with BEE-owned entities. One of the key drivers of economic development and employment in South Africa is increasing the capability, capacity and participation of SMMEs.
Enterprise development has an important role to play in this. The companies all have units to manage and promote these relationships and transactions. The work includes supplier and youth development, mentorship, business loans and advice.
The Minerals Council has a modernisation project covering new technologies, among many other issues. Successful outcomes here would in fact preserve jobs in that, without it, most of today’s deep-level mines – particularly platinum and gold – will simply be unable to continue to operate.
There are various measures that could assist the industry to improve its viability and preserve jobs. These include: