A flailing economy and angry workers bode ill for SA
Windhoek – South Africa’s gold mining workers started striking on September 3, embarking on an industrial action that analysts say will precipitate the decline of the country’s bullion industry, further sapping an already struggling mining sector and the economy in general.
It is nearly two weeks since workers in that country’s auto industry downed tools and the strike by gold mining workers fuels labour turmoil that reached a head last year with the deaths of 34 miners at Lonmin’s Marikana platinum mine after a standoff with police.
Labour unrest does not bode well for South Africa, which has registered tepid growth for the past four years. Unemployment in the country officially stands at 25.6 percent.
And now analysts say Africa’s economic powerhouse is in the throes of a failing economy.
Growth is forecast at just two percent this year, hitting a nadir since 2009. In 2012, South Africa’s economy registered 2.5 percent growth.
This year, the IMF estimates that economies across Africa south of the Sahara will on average grow by 5.1 percent – meaning that South Africa is far off the mark when compared to most of the rest of the continent.
The wave of strikes casts a pall on South Africa, an economy with a sophisticated financial market and world-class infrastructure.
The current economic troubles take the glitter away from South Africa, which has all along touted itself as the gateway to Africa.
“While South African gross domestic product growth is likely to have accelerated in the second quarter, the bigger picture is that the economy is still subdued by regional standards and by the standards of South Africa’s recent history,” Shilan Shah, Africa economist at Capital Economist in London said recently.
South Africa’s Chamber of Mines estimates that the gold mining industry shutdown would cost the country US$35 million daily in lost output.
The strike in the auto industry, which started on August 19, has been bleeding the economy US$60 million daily, reports say.
On September 2, the National Union of Metalworkers of South Africa (NUMSA) – an affiliate of the large and powerful Cosatu ‑ temporarily shelved plans to have 72 000 of its members working in petrol stations, automotive retail shops and car dealerships down tools to allow room for more negotiations with employers.
NUMSA had said it would go on strike to “exert pressure to the bosses for an equal redistribution of wealth at the point of production”.
The unions are pressing for a 60 percent pay hike for entry-level miners, while in the construction sector the demands are even higher: workers want salary increments totalling 150 percent.
Employers say they cannot afford these demands and offers have been made in the region of six to seven percent, setting companies and workers poles apart.
“Workers are no longer willing to be subjected to starvation and poverty wages. We refuse to allow the bosses to perpetuate apartheid racialised and poverty wages under the current and new dispensation,” the metalworkers union said.
Judging by previous strikes in South Africa, threats by workers and their unions are not to be taken lightly.
And it is the decline in gold output, and by extension loss of production in the entire mining sector, that will have bigger ripple effects across the economy.
At the height of its dominance of global gold production in the 1970s, South Africa accounted for 80 percent of the bullion produced in the world with more than 1 000 tonnes of the precious metal being dug out of its mines.
It is estimated that South Africa has produced a third of all the gold ever mined in modern times.
Those heady days are in the past.
Output has fallen by some 75 percent to around 250 tonnes of gold annually and the country now accounts for only six percent of global supply.
The fall in output is despite massive technological advances and far greater availability of capital, analysts say.
Other countries have increased their gold output, whittling away at South Africa’s share of global production, but it is the decline in actual mine yields that will be of concern to that country.
For instance, the Johannesburg index of gold mining companies has fallen 47 percent over the past 10 years, while the Thomson Reuters index of Australian gold producers has risen 27 percent and the equivalent index of Canadian gold producers risen 67 percent over that period.
Stuck in Apartheid
South Africa’s Deputy President Kgalema Motlanthe last week offered some insights into some of the root causes of the problems bedevilling the mining sector and the economy at large.
The mining sector’s reluctance to transform and end its exploitative labour policies is to blame for the current labour strife the sector is grappling with, he pointed out.
This is a belief shared by many analysts, who indicate that the slow pace of reforms and the low levels of indigenous participation in mine ownership mean the sector remains firmly rooted in its dark apartheid past.
While the mining industry is also reeling from the effects of a global economic slowdown characterised by declining demand for key minerals, its problems are chiefly to do with the fact that it remains stuck in the past, said Deputy President Motlanthe.
“The South African mining sector faces problems arising from a convergence of the cumulative effects of past policies, practices and a global economic environment characterised by declining demand for commodities such as platinum and gold,” the country’s second-in-command said at South Africa’s 2nd Annual Mining Lekgotla.
“Over the years the mining industry, supported by a raft of discriminatory legislation, has developed methods of making super profits by relying on the super exploitation of unskilled workers,” he added.
Deputy President Motlanthe said that labour practices in the mining sector are archaic and mining investors have gotten used to decades of exploitation of cheap, migrant labour.
Quoting South Africa industrial sociologist, Motlanthe said that the “pattern of migrant labour super-exploitation-characterised by 12 long months with only a Christmas and Easter break-has remained unaltered’ for the past 18 years.
“Sadly, the mining industry has remained a prisoner of its apartheid past in this core element of cheap labour sourced through migrants punishing annual work cycle and all the social evils associated with that cycle.
“No amount of employment equity plans and empowerment transactions have ventured to tamper with this spinal essence of the industry,” Motlanthe said.
“The democratic conditions in which the industry is now operating require that it re-skills the labour force and rewards them commensurate with their contribution,” he added.
Speaking at the Mining Lekgotla, Anglo American CEO Mark Cutifani conceded that the mining sector should self-introspect, adding that the “Marikana tragedy was a stark reminder that we as an industry need to do more”.
Deputy President Motlanthe said South Africa’s mining sector must break with its “undesirable past by making workers feel valued for their contribution as wholesome human beings that must have decent jobs and sustainable livelihoods, including proper housing, recreation and time with families”.
The Deputy President is a former trade unionist in the mines sector. The executive chair of African Rainbow Minerals, Patrice Motsepe, expressed some optimism but also pointed out that reforms were needed. Motsepe recently told Mining Weekly Online that his company was tackling worker issues inherited from apartheid and that firms had to partner the government and municipalities to provide its workers with acceptable accommodation.
The Marikana Legacy
At the Ruth First Memorial Lecture at the end of August, which focused on developments in the 12 months since the Marikana massacre, Trevor Manuel – who chairs South Africa’s National Planning Commission – said the problems facing the country went beyond just the mining sector.
“Surely, the challenges are about far more than the tragedy of Marikana, the mining sector, or even the cruelty of the migrant labour system.
“What is at the heart of the problem we need to discuss is what the systems of equity and fairness are, and are perceived to be,” he said.
The former Finance Minister went on: “As a country, we must use the Marikana tragedy as a lesson – a wake-up call.
“We need to deal with the proximate causes of the massacre, for which there is a judicial commission of inquiry, and the causes that are deep-seated that stem from our history
“The aim is to build a new society, a society both free of racism and sexism and one that is prosperous, where all the people of this land share in the fruits of its harvest.
“Colonial oppression and racial exploitation, perpetuated for over three centuries, dominates our history.
The discovery of diamonds in the 1860s and gold in the 1880s resulted in a dramatic turn in our fate.
“The tools and weapons of colonial expansion were trained on the exploitation of South Africa's natural resources, using cheap labour as the means of production.
“Land dispossession, forced removals, influx controls, poor education for black people and a sophisticated security apparatus were used to exploit our mineral wealth.
“Later, the migrant labour system, the homeland system and bantu education were added to the lexicon of exploitation, with a single purpose in mind – to exploit the land while denying black people their rightful share.”
Manuel said though there had been positive developments since Independence in 1994, the system of exploitation largely remained intact.
“The hard reality is that the pattern of migrant labour super-exploitation – characterised by 12 long months with only a Christmas and Easter break – has remained unaltered in the 18 (now almost 20) years of democracy.
“There has been no overhaul and investment in the migrant labour system at all, There has been no attempt to find new ways to effect a more humane (shorter migration cycle and better paid) system of migrancy akin to the best migrant labour system in the world.
“There has been no effort to create a system that rebuilds the migrant miners nuclear family through short (three to four-month) work cycles; that would ensure a reinstatement of maximum remittances home to increase cash flow to the rural poor; that would significantly reduce the propensity for HIV infections; that would enhance attendance and reduce absenteeism driving up both productivity and ensuring that mining becomes a more attractive industry to work in and invest in.
“Sadly mining has remained a prisoner of its apartheid past in this core element of cheap labour sourced through a migrant's punishing annual work cycle and all the social evils associated with that cycle.
“No amount of employment equity plans and empowerment transactions have ventured to tamper with this spinal essence of the industry.”
• The National Planning Commission chief said South Africa remained plagued by:
· High levels of poverty and inequality;
· An economy that is not growing fast enough to ensure rising living standards for all;
· A huge degree of mistrust between the major social partners;
· An inefficient bureaucracy unable to deliver even the most basic services to poor communities;
· A fractious labour relations environment characterised by violence, intimidation and illegal strike activity; and
· Weak leadership from all major social partners.
To address this state of malaise, Manuel said, “In June 2011, the National Planning Commission released a diagnostic document setting out the objectives of a plan for 2030 and identifying the key challenges confronting South Africa in realising those objectives.
“The objectives of the plan are to eliminate poverty and reduce inequality by 2030.
“The nine challenges that the NPC identified were that too few people work, the quality of education for black learners remains poor, the age and location of our infrastructure and the spatial legacy of apartheid is still exclusionary, we have a high disease burden and a failing public health system, an economy that is unsustainably resource-intensive, public services that are uneven and often of poor quality, high levels of corruption and the reality that South Africa remains a divided society.
“There is a substantial degree of overlap between these nine challenges
“The lessons of Marikana speak to what remains undone in our democracy.”