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Home News Wage deal ends South Africa platinum strike

Wage deal ends South Africa platinum strike

Published on 24/06/2014

The world's biggest platinum producers and a radical union signed a wage agreement Tuesday to end South Africa's longest mining strike, the companies and the union announced.

The leader of the militant Association of Mineworkers and Construction Union (AMCU), Joseph Mathunjwa, described the deal as a “victory” for the workers.

But the producers — Lonmin,Anglo-American Platinum and Impala Platinum — said “there are no winners in this strike.”

The five-month strike hit production in the world’s top platinum-exporting country, with companies reporting a combined loss of 24 billion rand ($2.27 billion) in earnings and 10.6 billion rand (about $1 billion) in workers’ wages.

“It is our sincere hope that our companies, our industry, our employees and all other stakeholders will never again have to endure the pain and suffering of this unprecedented strike period,” the CEOs of the three companies said in a joint statement.

“None of us, nor the country as a whole, can afford a repetition.”

Miners are expected to return to work on Wednesday, but the companies don’t expect to reach full production for several weeks.

President Jacob Zuma welcomed the conclusion of the strike, which helped push the economy of Africa’s most developed country into contraction in the first quarter of this year for the first time since the global economic crisis five years ago.

“A long, protracted strike was no longer in the interests of the parties involved or the country at large,” Zuma said.

The three companies offered increases that vary according to worker categories.

The deal hikes wages for the lowest paid workers whose basic salary is less than 12,500 rand ($1,180) by 1,000 rand ($95) a month for two years and by 950 rand in the third year.

The hikes work out to just under 20 percent more for the lowest paid.

Workers had originally demanded that basic wages be increased to 12,500 rand — which would have represented a more than doubling of income for many.

Mathunjwa acknowledged that not all workers would reach that level within three years, but described the settlement as “dignified.”

The demand for 12,500 rand was the rallying point of a deadly strike at Lonmin in 2012, when 34 mineworkers were shot dead by police in a matter of minutes at Marikana.

On January 23, more than 70,000 workers downed tools for the same demand and better benefits, with government intervention last month failing to yield results.

While AMCU has failed to secure its original demand, analyst Peter Attard Montalto of Japanese bank Nomura warns that the level of increases achieved “promotes further the chances of restructuring by the companies in the coming three years whilst also securing some unfavourable precedents in the labour space.”

Possible changes could include the shifting of operations to other areas such as neighbouring Zimbabwe and the disposal of unprofitable shafts, he said.

– Other industries in firing line –

The union, meanwhile, looks likely to target other industries.

“The newly empowered radical union …(AMCU) having won a major victory over the platinum (firms), will look to take on other key industries and challenge more moderate government-aligned unions,” said DaMina risk advisors.

A bid by AMCU to stage a strike in the gold sector was dealt a blow on Monday when a labour court outlawed the planned action.

But the spectre of more strikes is looming.

South Africa’s largest union has warned of an imminent strike that could hit the country’s struggling manufacturing sector amid a deadlock over wage increases.

More than 200,000 members of the National Union of Metalworkers of South Africa (Numsa) are expected to down tools on July 1.