South Africa: platinum strike ends June 2014
Updated 17 July 2014
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0.1 Summary
Five month long platinum strike ends. Workers will reach target monthly wage of R12,500 within three years. Although some companies may cut staff or operations to make mines profitable, this is good news for the economy. Reserve Bank hopes growth for 2014 will bounce back to 2%.
0.2 Detail
On 24 June, the Association of Mineworkers and Construction Union (AMCU) signed a deal with Impala Platinum, Lonmin and Anglo American Platinum, South Africa’s three biggest platinum companies, to end its five month long strike.
The three year wage deal secured all workers a monthly wage of R12,500 (£690) after three years. The deal contained a no-strike clause and a back to work bonus. 236 laid off workers were re-employed. But there was no promise that companies would not restructure.
0.3 Anatomy of the strike
Five months ago, 70,000 workers joined the AMCU strike for a 150% wage increase. Companies initially offered AMCU a 9% wage increase (and later 10%). A lengthy impasse followed, where neither side showed flexibility. Mining operations were shut down. Strikes were marred by inter-union rivalry with NUM, intimidation and violence, with nine people killed.
0.4 How it ended
In early June, new Minister for Mineral Resources Ngoako Ramatlodi made a push for renewed dialogue. The sides agreed readily. The cash-strapped companies needed to rebuild platinum stockpiles to survive. AMCU members pressured the union’s leadership for a resolution, and AMCU President Joseph Mathunjwa chose to be pragmatic: at 18% the first year wage increase was closer to the original 9% offer than AMCU’s 150% demands.
0.5 Impact
This was the most expensive strike in South African mining history. Platinum companies lost R23 billion (£1.2 billion) in revenues and workers R10.6 billion (£585 million) in wages. Companies say they are unlikely to resume normal operating levels until early 2015. Unprofitable shafts may be closed. Trade union Solidarity warns of up to 10,000 job losses. Anglo American CEO Mark Cutifani said recently he didn’t think platinum mines were key for the company, adding Anglo should consider taking a step back from SA. Mining accounts for 60% exports and 37% government revenue. The mining strike was a significant factor in the 0.6% reduction in GDP during the first quarter of 2014 and recent S&P’s downgrade of SA’s credit rating to BBB-(stable).
Analysts hope the end of the strike will bring stability and improve growth prospects following recent cuts. The Reserve Bank said it now expected the economy to bounce back to growth above 2%.
0.6 More strikes?
Crucially, on 23 June the Labour Court ruled that AMCU would not be allowed to break last year’s gold sector agreement and strike, as it hoped, for R12,500 in the gold sector. This could prevent mining strikes for at least the next year. However, the National Union of Metalworkers of South Africa is set to start national strikes in the automotive sector next week, while public sector wage negotiations are due to start in the third quarter of this year.
0.7 Comment
The end of the platinum strike is undeniably good news. To deliver sustainable growth, the government will now need to take long-term steps to rebuild SA’s mining sector, and reform the labour environment.
0.8 Disclaimer
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