The spectre of equality Platinum: the politics of a simple wage demand | by Amandla! editorial staff

by Jan 21, 2013Magazine

amandla-28-spectreFor two months Angloplats refused to negotiate over the minimum demand for R16,500 per month before tax and deductions – a variation of the demand for a living wage of R12,500 in hand that spread like wildfire in the mining industry. The bosses repeatedly sent dismissal notices to the striking workers. Finally they had to accept a reinstatement of all strikers, a once-off payment of R4,500 in two steps, a R400 wage increase for all and an early start to next year’s wage negotiations.

Anglo Platinum’s 2011 annual report boasts that it produces 40% of all platinum in the world. After the deal many ask: were the workers’ demands unreasonable? Would agreeing to the striking miners’ wage demand threaten this giant’s viability?

‘Not affordable’…?

A concept like ‘viability’ cannot be used in any objective sense here. In 2007 and 2008, Angloplats paid out a stunning R15.9 and R13.1 billion to shareholders as dividends from profits for two extremely fat years. This amounted to R2.5 billion more than the total labour cost (including management’s wages) recorded by StatsSA for the roughly 112,000 employed throughout the platinum mining sector in the same period! Half of this labour force worked for Angloplats.

From the bosses’ point of view, this massive channelling of profits to individual income, consumption or financial speculation was very ‘viable’. But in 2009 and 2010, no dividends were paid. Not so ‘viable’ in a capitalist corporation. Happily for shareholders, in 2011, more than R3.1 billion was again paid out. This corresponds broadly to the R3.4 billion in revenue the bosses claim in its 15 November statement was ‘lost’ during two months of strike.

The corporation still stands, despite this ‘loss’. This is one indication of what is affordable. And we write ‘loss’ within quotation marks. The platinum is not going anywhere. No revenue is lost, only postponed.

In comparison to the billions of rands regularly handed over to shareholders and to the so-called ‘loss’ in revenue, the CEO Chris Griffith maintained in a 9 November 2012 press statement that the workers’ demands would amount to about R2.6 billion in increased labour costs per year. He argued this was ‘clearly not affordable in a year when the company is experiencing such economic challenges’, pretending that the management’s refusal to negotiate for two months wasn’t the biggest economic problem of them all.

It is all about politics

The refusal was about class politics. This movement from below had to be defeated. For the corporate community, the danger now is that workers of South Africa realise that it wasn’t defeated. The bosses’ political investment in the future did not pay off.

A background is that platinum mining has increased in importance. Fifteen years ago, gold mining represented over half of all value produced by mining as a whole. Today, gold yields less than 20 in every 100 rand of value from mining. The opposite trend holds for platinum, which has risen from a position of relatively minor importance, and today contributes close to 30% of all value realised by the whole mining industry.

Even as its importance and value has grown, the share of revenue going to wages in the platinum sector has shrunk. A situation of super-exploitation of labour has been in place since 2001. The wage share in platinum mining is now the same as it is in agriculture. Just like in the rest of the economy, the decline starts around 1996–1998 when the new post-apartheid labour laws and bargaining procedures came into effect, and the use of labour brokers and contract workers took off.

The spectre of equality

The wage share fell from above 60% in 1998 and the years before to just 27% in 2010. This fall means an accumulated loss in wages of more than R128 billion. If the platinum sector’s 114,000 employees in 2010 had retained the 60% share of the total wealth they produced during one year, they would collectively have earned R20.3 billion more in wages and benefits. In such a case, the average gross monthly income for platinum mineworkers – i.e. before tax and deductions –would have been about R24,000 in 2010. This is double the average wage going to all employees today, the vast majority of whom earn much less.

If 60% of all new wealth created per year in platinum mining would go to wages today, as was the case in the 1990s, the profit share would be 40%. That remaining surplus would be more than enough to pay a hefty tax on profits, to reinvest and to pay for the restoration of the environment, which is completely neglected today.

There is a spectre haunting South Africa – the spectre of equality. The ghosts from Marikana whisper that everything, almost everything, could be completely different. The mineworkers are fighting for a living wage. Everyone knows, even those who deny that they know, that this is a fight for a new society, where we care for each other’s wellbeing. The maximising of profits at the expense of wages means the opposite. The 2012 spring in the mining industry proves in addition that continued profit maximisation spells the end of the democratic project.

Figure 2: The spectacular fall in the wage share in platinum mining coincides with the post-apartheid bargaining procedures and labour laws (Source: StatsSA Detailed GVA data 2010).

Inequality in mining? – Amandla! has the number!

Much has been said about inequality in the mining industry and the appalling contrast between ordinary workers’ pay and the spectacularly high remuneration of their bosses. What is less well known is that since 2008, Statistics SA has published an inequality measure for the different sectors of South African industry. This measure is called ‘the Gini coefficient’, after its Italian inventor, Corrado Gini.

The Gini coefficient scores inequality as a number between 0 and 1. A zero Gini coefficient means total equality: everyone has the same income. A score of 1 means total inequality: all income goes to one single person and everyone else gets nothing. South Africa’s overall Gini coefficient hovers around 0.70. This to one of the world’s most unequal distributions of the new wealth produced every year. If the Gini coefficient is 0.70, it means that 70% of all income (i.e. R70 out of every R100 in income) has to be redistributed for all to get the same income.

But be careful and note that in such a scenario – as in every situation of redistribution, even if not aiming for the extreme ‘Zero Gini Society’ – the super-rich would have had to give up much more, the upper middle-class some or a little of their income and the poor and working class would be uplifted to the level of all, namely to today’s average income. The average income implies ‘statistical communism’. To see what the average is we always divide the whole income equally between all.

In the South African mining industry, the Gini coefficient published by Stats SA has remained steadily above 0.80. It was 0.83 in 2008, 0.85 for 2009, 0.80 in 2010, and 0.81 in 2011.

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