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We know that there are many questions that our stakeholders may have on platinum wage negotiations. We have compiled this brief FAQs document to try and answer some of these.

How do wage negotiations work in the platinum industry? Do the producers follow a centralised bargaining process?

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.

What is the time period for wage negotiations – when did they begin and when did they end?

The previous wage agreements were in effect until the end of June 2019. While only signed on 15 November, the new agreements will be implemented from 1 July 2019.

The final agreement was reached after a productive and amicable negotiation process.

Which unions are recognised at each company? What does it mean to be recognised, and why is this different at different companies?

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
AMCU 72.5% 87.5%
NUM 4.5% 1.66%
UASA 4.2% 0.95%

Number of employees 11,316 22,511
AMCU 71.3% 82.3%
NUM 11% 2.7%
Solidarity 0% 2.4%
UASA 12.8% 1.9%
CEPPWAWU 0% 0.6%
No union 4.9% 10%

*Kroondal is not included in the above table

Why is it that a few major South African producers dominate global PGM production, but have no control over the price of the six PGMs?

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.

What was the background to this round of wage negotiations?

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. The most recent negotiation process began when the previous settlement expired on 1 July 2019 and the new agreed settlement will run until 30 June 2022.

How does a mineworker’s pay and benefits compare to other industrial workers in South Africa?

The platinum sector’s wages are higher on average than other industries in South Africa. Basic entry-level wages in mining also compare well to white collar salaries, such as in nursing and the South African Police Service.

SectorMinimum Wage
Metals and Engineering R7,840
Structural Engineering R6,537
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)

To note:

  • Based on 40-hour week and 4 weeks per month
  • Used the minimum wage for the entry level employee to each category
  • Based on basic pay

(1) Gazetted minimum wage
(2) Median teachers’ salary

Does AMCU seek industry collective bargaining?

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.

How does the industry propose contributing to closing the growing inequality gap?

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.

How does the industry propose mitigating the unemployment crisis in South Africa?

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.

Is mechanisation replacing jobs in the industry?

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.

What does the platinum sector need to grow?

There are various measures that could assist the industry to improve its viability and preserve jobs. These include:

  • A national reserve asset strategy – through the South African Reserve Bank supporting the World Platinum Investment Council in its engagements with the IMF and Brics countries to ensure platinum is adopted as a reserve asset
  • A national platinum fuel cell strategy
  • A national strategy to drive investment demand for platinum
  • A commitment from government to match funding by the PGM sector in market development in jewellery, fuel cells and platinum investment.
  • Gradual modernisation of mining methods and rising productivity
  • Employment growth of 2% per annum
  • 2.54% growth in South African mine production
  • At this rate, by 2050:
    • Value of PGMs produced (in 2015 average price terms) would be US$273 billion
    • PGM production and GDP would more than double (up 141%) to around 376,000 from around 168,000
    • Total direct and indirect employment would rise to one million people
    • Salaries and wages paid to employees would increase
    • Supplier industries would more than double sales to PGM sector
    • Growth would attract new investment in PGM and associated industries
    • Economic transformation would receive a major boost from growth in the sector, helping overcome legacies and driving positive societal change (through ownership, skills development, procurement, etc.)
    • Export earnings from PGMs would rise substantially, creating significant export earnings for the country
    • Tax revenue would increase which could, in turn, support the national budget priorities