The four biggest gold miners in South Africa, the source of a third of all bullion the world has yet produced, say productivity must be included in the wage negotiations with employees due to begin in about April.
AngloGold Ashanti Ltd., Gold Fields Ltd., Sibanye Gold Ltd. and Harmony Gold Mining Co. have been trying for at least a decade to link pay increases to efficiency gains. After platinum workers won basic wage raises of as much as 20% following a five-month strike last year, they say a productivity link is needed more than ever.
“2015 is the year where both sides, the workforce and the companies, have to say, ‘we share in the risk, burden and upside of productivity’,” AngloGold Chief Executive Officer Srinivasan Venkatakrishnan said in an interview. “Everybody is obviously concerned about the disruption which happened in platinum coming across to gold.”
A wage agreement linked to productivity would mean a portion of employees’ pay would be dependent on the performance of the mine or company. The industry’s current deal, which includes 5,400 rand ($462) a month basic pay for entry-level workers, is due to expire in June.
A productivity-linked agreement may help companies offer starting pay closer to the 12,500 rand a month demanded by the Association of Mineworkers and Construction Union when it led the record-long platinum strike last year.
That said, such an accord may be difficult to reach in practice. South Africa’s gold-mining industry conducts wage negotiations through collective bargaining, where an agreement between the largest companies and majority union is applicable to all employees.
That makes productivity clauses more complex to agree on, according to Andrew Levy, managing partner of labor-market consultancy Andrew Levy Employment.
“You can’t possibly talk about it” through collective bargaining, he said. Worker efficiency can differ at each mine, depending on hard-to-measure factors such as ore grade, machinery used and extraction techniques.
Still, the subject must still be addressed, Levy said. “If mining is going to go ahead and prosper and transform itself, it’s going to have to happen.”
The Chamber of Mines, which negotiates on behalf of the gold companies, concluded an in-principle agreement to link pay to productivity in 2011. This was derailed a year later when workers were killed by police near a Lonmin Plc platinum mine in 2012 during a protest over wages and as the AMCU gained members, according to Elize Strydom, the chamber’s chief negotiator.
The chamber “needs to put this issue on the table and really push very hard,” Strydom said. As a relative newcomer to talks, the idea “hasn’t really been tested” with the AMCU, she said.
While pay agreements are concluded between companies and the majority union centrally, productivity-linked bonuses could be “implemented at company level,” she said.
Companies will redouble efforts to introduce such measures into wage talks this year, according to Gold Fields CEO Nick Holland.
“Clearly there’s a greater imperative than ever to try and do something innovative,” he said. “That helps to grow the pie for both the companies and the employees involved.”
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