Socio-economic drivers behind South Africa’s 2012 mining strikes

During 2012, South Africa experienced unprecedented labour disruptions across the mining industry, as well as other sectors of the economy. Gold Fields was one of numerous companies affected – with unlawful and unprotected strikes resulting in prolonged closures at the KDC and Beatrix mines. The strikes were characterised by violence and intimidation, which disrupted production and seriously questioned the validity of established collective bargaining frameworks. As a result they had a negative impact on investor sentiment towards South Africa. As a result, South Africa’s sovereign debt credit rating was downgraded – along with the credit ratings of the country’s leading mining companies, including Gold Fields.

These strikes were a symptom of broader underlying dynamics that have significant implications not only for the South African mining industry – but also for other business sectors as well as government. This includes:

  • Inadequate economic transformation: Widespread frustration that post-apartheid cultural and legal transformation has not yet been matched by broad-based social and economic transformation (both inside and outside the workplace). The ‘incomplete’ nature of transformation has resulted in persistent inequality – and associated demands for above-inflation wage increases
  • Reduced deference: A wider breakdown in deference for well-established power structures such as political parties and established trade union leadership at national and branch levels

In addition, mining strategy consultant Gavin Hartford, of South Africa-based advisory company The Esop Shop, has highlighted a number of dynamics affecting the South African mining industry in particular. These include:

  • The migrant labour system: The legacy of the apartheid-era migrant labour system – and the fact that many of its underlying fundamentals (such as poor quality accommodation, the separation of employees from their families, etc.) remain in place – despite the efforts of the mining sector to address its worst aspects
  • ‘Living out’: The unintended consequences associated with the ‘living-out allowance’; whereby in an effort to improve freedom of choice, employees were given allowances to live in off-site accommodation. This resulted in large numbers of workers opting to save their allowance by living in informal, poor-quality settlements rather than establishing proper second homes near the mines (i.e. in addition to those owned in labour-sending areas). The social costs associated with this have contributed to increased unhappiness among migrant workers – despite years of real salary increases
  • Rock Drill Operator grievances: Specific grievances among Rock Drill Operators – among whom there are a particularly high proportion of migrant workers. This includes a perception that despite doing what is often the most physically demanding and production-critical work, they are underpaid compared to their industry peers. In addition, they traditionally enjoy limited prospects for advancement or career progression, despite often long service periods – due to high rates of illiteracy and established workplace labour structures
  • Inadequacy of established labour relations: Dissatisfaction among many more junior, migrant workers with longestablished labour relations frameworks. This includes a growing perception that senior union cadres are failing to fully reflect their interests

Gold Fields is working with stakeholders from government, organised labour and the mining sector to examine ways in which we can effectively address some of these underlying issues. This is not only to ensure we meet our formal, regulated transformation requirements in South Africa – but also to ensure the mining sector’s labour models are truly aligned with modern democratic values, as well as the evolving aspirations of employees – whether from South Africa or beyond.

Current efforts include, for example:

  • Labour-sending areas: Active support for socio-economic development in labour-sending areas both within South Africa and the Southern African Development Community
  • Accommodation: Ongoing enhancement of employee accommodation, including the construction of family units and the facilitation of home ownership
  • Education: The promotion of Adult Basic Education and Training within the workforce, to address illiteracy and undereducation
  • Career structure: Examination of new potential career frameworks for junior operational personnel that would offer credible opportunities for advancement
  • Incentivisation: Examination of potentially more rewarding incentivisation packages (for example, similar to the new operating model agreed at South Deep during 2012), that would increase the potential take-home pay of individuals, while also improving mine productivity
  • Labour relations: Broad engagement with union, government, employee and other sector stakeholders, amid multilateral efforts to negotiate a mutually acceptable enhancement of current collective negotiation structures
  • Direct employee communication: Establishment of forums whereby mine management can interact directly with employees – in addition to established union structures – to hear their grievances and issues first.