Minimum wage increased: Focus on mining sector

Connie Queline

Minimum wage increased: Focus on mining sector

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DUDUZILE RAMELA: I’m Duduzile Ramela, in for Jimmy Moyaha this evening. From March 1, 2024, a new national minimum wage determination will come into effect after Labour Minister Thulas Nxesi announced earlier this month that the minimum wage determination moves from R25.42 to R27.58 for each ordinary hour worked. Farm workers and domestic workers are included.

However, workers employed on an expanded public works programme are entitled to a minimum wage of R15.16/hour from R13.97/hour.

So the Department of Labour and Employment describes the minimum wage as the floor level below which no employee should be paid.

We are going to be taking a look at the national minimum wage, but in particular one sector, and that’s the mining sector because we’ve also got the Mining Indaba happening this week – today being day one. For that conversation, we speak to David van Wyk, lead researcher of Bench Marks Foundation.

David, thank you so much for your time this evening. I think maybe you can help us understand the origins of the national minimum wage, and how much we were talking about at the time to try and assess whether this makes a difference.

DAVID VAN WYK: Well, I think that the idea of a minimum wage is an extremely good idea. The only problem for me is that very often it becomes a maximum wage for many people, and employers pay just exactly that amount and nothing more, and when they can actually afford to pay more, they don’t.

We’ve had very serious strikes in this country and very serious labour disruptions over the years – including in the mining sector. The Marikana massacre comes to mind and sit-in strikes and so on over the last year have been around wages as well.

The mining industry pays more than the minimum wage generally. In gold mines, they pay around R8 000 a month as an entry wage, and in platinum mines around R12 400 or more.

But those are also already outdated in terms of inflation and so on, if we really look at it. Those are really 2012 wages. We are already in 2024 – and the mines are still paying only that.

But a lot of mines depend on subcontractors and labour brokers, and subcontractors and labour brokers are not bound by the wage agreements that unions make with mining companies. So they pay their workers general workman’s wages rather than the industry standard for a wage in those industries, which has been negotiated with trade unions. And that increasing reliance on subcontractors and labour brokers and so on is exactly in the struggle against trade unions that the mines are doing – that sort of thing.

Now, this morning the president at the Mining Indaba spoke about a new mining dispensation, and he spoke about how high the cost of mining in Africa is. I’m not quite sure in which bubble he’s living because mining costs in Australia are far higher than they are here, and mining costs in Canada are far higher than they are here. In fact, we have some of the lowest-cost … mines in the world with very high levels of return on investment.

Read: Many South Africans not paid a living wage

But we are always told the same story about the high cost of production in South Africa, etc, apart from which there are also a great deal of subsidies for mines and so on in terms of the investment climate that the government tries to create for them to invest.

But the problem is that mining is in steep decline. It’s in steep decline simply because minerals are getting depleted.

The president used the words ‘sustainable mining’. There’s nothing like sustainable mining. At some point, mining comes to an end and you need to move beyond mining, and you need to begin to train the population for other economic opportunities already, so that when mining actually disappears people are employed in new sectors in the economy.

The problem is that we can’t transition as long as we have very low wages.

If you have low wages, you’ve low market demand. Low market demand means there’s no incentive for manufacturers to invest in the country or for local manufacturing to arise within the country.

As a consequence, also, the distance that we are from global markets for manufactured goods makes our exports not competitive.

So we actually might have to look at an inward-looking national strategy for manufacturing within this country and try to develop local market demand through proper wage structures and so on that would encourage people to invest in manufacturing – so that we can move away from mining.

There was a lot of talk at the Mining Indaba about value-add to minerals and things like that, but the problem is that you can’t value-add minerals that don’t belong to you. These minerals are already sold to Japan, even before they’re out of the ground. They’re already sold to China before they’re out of the ground. They’re already sold in the United States and in the northern hemisphere before they’re out of the ground, because the companies don’t belong to us.

They are global companies that are listed on the London Stock Exchange, and on the Beijing and Hong Kong and Canadian stock exchanges and so on. That’s where the owners of these mines are. That’s where the dividends get paid out. That’s where the jobs are in fact created, and that is also where the benefits of our mining actually come.

DUDUZILE RAMELA: So David, what does that mean? When you speak of an inward-looking national strategy, you’ve got like a number of mining companies where workers are staged, and it is being sold as a union issue. ‘We don’t want this union; we don’t want that union.’ But when you dig deeper and you actually speak to some of these mine workers, they’ll tell you that they can barely afford [food] themselves, yet they’re doing such dangerous work, staging dangerous underground sit-ins.

DAVID VAN WYK: Well, the South African mines are among the most dangerous in the world to work in.

You have to be really, really skilled to work in a South African mine, even though you don’t have any formal education or qualifications.

We analyse the mines and they tell us how many millions they spend on worker literacy and things like that, but their literacy levels never improve. There is always about 40% of their labour force who are not literate.

Now you don’t know how these people operate machines and how they understand the technicalities of what they’re doing underground. And that is because of this dependence on super-cheap labour.

If you compare South African mine workers to Australian and Canadian mine workers, the latter make 10 times more money than we do here – much more than 10 times.

Now, inward-looking industrialisation would require that we actually pay people sufficient money for them to afford manufactured goods. At the moment people can barely afford food. There’s no market for manufactured goods. We have to export anything that we manufacture in the country.

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And because we’re so far away from international markets, our manufactured goods are not competitive on those particular markets.

Perhaps we could manufacture and sell in the rest of Africa and try and compete with Japan and China and South Korea and so on, but we would really have to have aggressive agreements with other African countries so that they can absorb what we are manufacturing in South Africa – and they might blame us for hampering their manufacturing.

The current situation that we are in is leading to deindustrialisation.

If you go to the south of Johannesburg, across the N2 the factories are standing empty.

If you go to any of the industrial areas, in Bloemfontein, anywhere – you can go Cape Town and go to the industrial areas – the factories are standing empty.

The places that once manufactured clothing are standing empty because we’ve got Chinese malls everywhere. They bring in very cheap goods and our industries can’t compete because we don’t protect our industries.

DUDUZILE RAMELA: When you speak of mining being in steep decline, and you speak of us possibly collaborating with the rest of the continent, we’ve got what we call the African Continental Free Trade Area, right? What is it that the likes of Botswana are doing right? And which other country can we cite outside Botswana that knows how to structure a deal to benefit not only itself but its people?

DAVID VAN WYK: Well, you could see how aggressively the Botswana president negotiated with De Beers last year, saying that Botswana wants a share of the retail sector, of jewellery – not just the raw material, rough diamond exports, as it was until now.

About 80% of the value of diamonds was realised in the retail sector outside Botswana. Botswana said: “No, no, we want to share in that retail sector, otherwise you can’t continue mining here.”

Read: De Beers deal is boon for Botswana’s economy, president says

That’s the kind of thing that we should be doing. We should be saying to the mining company: “Sorry, you can’t mine here unless you meet the following requirements.”

We’ve got almost 90% of the world’s manganese, for example. Manganese is incredibly important for a transition to alternative energy. But we are just exporting it. We are exporting 95% of it. We don’t even manufacture batteries on scale, and this is a core component of batteries.

DUDUZILE RAMELA: That’s just it, David. So what then happens when you are already talking about the price being fixed elsewhere outside of South Africa? Before that mineral comes out of the belly, will there really be change, or are we daydreaming at this point?

DAVID VAN WYK: Well, no, we’re not daydreaming because we had until recently – and I don’t know what the figures are now – 85% of the world’s platinum between ourselves and Zimbabwe.

We could have come to an agreement to say to the platinum mining companies: “Sorry, you can’t have the platinum at the scale that you’re taking it out at the moment. Some of it’s got to remain behind for beneficiation. We’ve got to set up batteries and things like that in the country.”

Now, unfortunately, the catalysing industry is collapsing because the combustion engine is going out the window as the uses of platinum are falling. And so the price of platinum is not very high.

But right now the gold price is very high. Right now the [prices of] other raw materials like copper and iron and so on are very high because of the wars that are being conducted all over the place.

The American arms industry has grown very dramatically, and we are [now] seeing the profits of our minerals being wasted on battlefields in the Middle East and battlefields in Ukraine and so on. That’s where the surplus minerals of the planet are being shut away and wasted, so as to promote a bubble in the market. As soon as these wars are over, the prices are going to fall again.

DUDUZILE RAMELA: And so, when you speak of beneficiation, which is the political speak, almost everyone you listen to – more so in this election year – speaks about beneficiation. Then what should we understand about that when we are also an energy-deficient country? What will it take, really? Or maybe the question is what has disallowed it?

DAVID VAN WYK: Oh, I think that the important thing to note is that we tend to go for dinosaur technology. We think that we must follow the dirty path of Europe instead of leapfrogging ahead of them.

We’ve got all the sunshine in the world, but Germany produces more solar energy than we do. That really is not good enough.

We want to produce nuclear. One nuclear power station will take 20 years to build. Just like the coal-fired power stations at Medupi and Kusile, which were a complete disaster, we now want to build nuclear power stations. Nuclear power stations will take long to build. They are massively expensive, and in the end they are also going to be dirty and hazardous.

Why don’t we take that which we have a competitive advantage in? We have a competitive advantage in solar. We’ve got a very long coastline for wind. We’ve got a very long coastline for waves, and we’ve got all these old, abandoned mines, 6 000 of them, that we can use for gravitational electricity, that we can use for gas because all of them are full of gas – and that we can use for other forms of generating electricity, geothermal and so on.

We’re not looking for simple solutions. We always want to make simple things complicated.

DUDUZILE RAMELA: [Let’s leave it there.] David, thank you so much for your time. David van Wyk is the lead researcher at Bench Marks Foundation.

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