Thu Jul 31 21:34:18 SAST 2014

Lipstick on a pig: still a pig

Jun 2, 2013 | Ray Hartley |

PRESIDENT Jacob Zuma called a special briefing this week aimed at halting the slide of the rand.

Ray Hartley

He said that Deputy President Kgalema Motlanthe, once general secretary of the National Union of Mineworkers, had been tasked with sorting out the mess on South African mines, along with Finance Minister Pravin Gordhan, Labour Minister Mildred Oliphant and Mineral Resources Minister Susan Shabangu.

Zuma tried to sound optimistic, saying: "A series of interactions have taken place during the past week and these have been fruitful. The parties have appreciated the intervention and assistance from government."

His words didn't halt the slide of the rand and it hit a new four-year low at more than R10 to the US dollar. It looked like he was trying to put lipstick on a pig and that no one was buying it.

But the truth is that the rand was already heading for the hills, mostly because of factors like the strengthening of the dollar against most world currencies.

The question that South Africa now faces is: Can Motlanthe pull the mining sector out of the fire?

The first problem Motlanthe faces is that he is politically weak within the ANC. He challenged Zuma for the party leadership at the Mangaung conference last year and lost - badly. Without political backing, he will have an uphill battle selling whatever deal he carves out to the unions and mine bosses.

The second problem is that he comes from NUM, which no longer enjoys monopoly status . The rival Association of Mineworkers and Construction Union (Amcu) was this week confirmed as the majority union on the platinum mines - the scene of last year's Marikana killings. Amcu now enjoys 70% representation at mines where the shootings occurred.

The third problem is the unrealistic wage demands - NUM has demanded a 60% increase for some workers - just as the industry is facing the lowest prices for its minerals in many years. There just isn't much room to manoeuvre.

But Motlanthe does have an ace up his sleeve. He understands the mining industry and is seen as a negotiator who will take a pragmatic approach to the crisis. He has the right personality to pour oil over the troubled waters by getting all parties talking around the same table. His major challenge will be to bring rational thinking to what has become emotionally charged.

He will have to find a way for all the parties to recognise one very important fact: The very future of mining in South Africa is at stake. Another round of severe labour unrest will turn the stomachs of investors who are already at the limit of their endurance.

The industry needs to make some major decisions about its future. Over several decades, promises have been made to address the living conditions of miners and vast sums of money have been paid over to government accounts for this purpose. But very little has been done and miners live in squatter camps with few basic services.

It is no longer possible to have people living in conditions that were prevalent during the industrial revolution two centuries ago and expect them to come to a rational agreement in a bargaining council.

Formal housing, family life and the provision of services are no longer negotiable.

But this must be accompanied by a rapid rise in productivity to justify higher-than-normal wage increases. Increased productivity means fewer, better paid, people doing more work.

There is a downside. Fewer workers mean retrenchments and fewer job opportunities.

This realignment of the mining industry to bring it into the 21st century can only take place if Motlanthe can get all the parties to agree. To achieve that he will have to manage the negotiation process brilliantly. Zuma has handed Motlanthe a poisoned chalice. He had better find the antidote quickly.

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Thu Jul 31 21:34:18 SAST 2014 ::

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