Are South African miners getting a fair wage?

Sunday 16 September 2012
CATEGORY: economy / technology
(12 comments) /
South Africa Mining Violence

The basic answer is that although it might seem like a simple question, to answer it is actually quite complicated.

Compared to major developing world countries, South African workers, and platinum mine workers in particular, are earning not too badly, R5000 pm (just over $600 pm) vs a median** SA wage of R3000 pm. They beat Chinese mine workers ($174 pm) and Indian ($102 pm) ones even more so.

South African factory workers are earning less than platinum miners, but still more than their counter parts in China. Anecdotal evidence suggets that India and Bangladeshi factory workers earn even less. (Clothing and textile jobs, particularly in the Cape has been decimated as a result).

Why do our platinum mineworkers earn more than SA factory workers? South Africa has more than 80% of the world’s proven platinum reserves. Our platinum miners don’t face the same kind of international competition that workers in other sectors experience might be one answer.

But how does South Africa stack up against developed countries’ miners? So off I went to research Australian miners’ wages. What I found was surprising. Incredibly Australian miners earn almost 10 times what our platinum miners earn (round $6000 pm). How can Australian mining companies afford this?


Currently SA Platinum miners are not doing too badly

It’s all about productivity

‘Productivity isn’t everything, but in the long run it is almost everything’. Paul Krugman

As Krugman noted, a country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker (or productivity).

This report on Australian productivity points to some answers as to why their miners are so well paid. Bear in mind that the US is seen as the standard of productivity, one of the most productive economies in the world. It is in the US where new technologies and management techniques – the stuff that improve productivity – are usually first felt. In fact, the Australian report describes it as “the world’s productivity frontier”.

Australia as a whole is on average about 20% less productive than the USA. Mining was until recently the only sector of the Australian economy that was more productive than that of the USA. Australian mine workers were at one point producing 70% more than US ones for the same amount of work. Australia has done this through introducing new methods and technologies of mining that’s made it easier and cheaper to produce goods:

“An increase in the use of open-cut mining has been a key development, along with a general increase in the scale and automation of mining equipment.” Productivity in the (Australian) mining sector.

South African mining is in dire straits

Even in the midst of a global mining boom South African mining has declined in output. This is also true of platinum mines. Direct empolyment in mining has shrunk by a third since from 1970 to 2004 (660,000 to 440,000). Tim Cohen outlines in today’s Business Day the extent of the problem:

During the commodity boom from 2001 to 2008, the mining industry shrank by 1% a year, compared to growth of 5% a year among the world’s 20 mining exporting countries. This is despite the gold price, for example, going from about $400 an ounce in 1994 to $1,800 /oz.

South Africa’s state research body the CSIR wrote a report in 2011 called State Intervention in the Mining Industry that claimed the problems besetting South Africa’s mines were due to a number of factors that included poor skills and safety, which translates into poor productivity.

I will just pull out a few quotes from the report:

State mediated funding for health and safety research, through the Mine Health and Safety Council, measured in 2011 Rand, has fallen from R80-million in 1996 to under R20-million in 2010.

South Africa’s mining accident and fatality record is unacceptably high. Responsible multi-nationals are reluctant to establish or continue operating here as they cannot accept the consequences in human life. As one example, BHP Billiton will not mine platinum in South Africa, as it does not believe it can do so safely.

As mining has gone from shallow to deep, productivity has become poorer and costs have risen.

In platinum, there are extensive, relatively shallow resources available, but South African production has fallen since 2006 despite the global commodities boom in 2007 and 2008. Analysts list a number of contributing factors, including the role of technical challenges: “it is clear that mining is becoming more complicated than it used to be”.

There is a worldwide shortage of technical skills particularly in mining. High-level technical skills are particularly useful in the conceptualization, design and implementation stages of a new mining project. It is at these stages that most value is created, and that require the most innovative, high level and experienced skills that can be brought to bear on the project. If high-level skills are not available, the value that will be created from a mineral resource will be reduced.

Many technical areas where the country had an international reputation, for ex-ample rock engineering, have been weakened by a lack of investment in new capacity and by the aging of the researcher population. Researchers participating in mining research have fallen in number from over 600 in 1988 to less than 80 currently.

The industry is constrained by a lack of skills in many areas, particularly in artisan skills, but also by a widespread lack of literacy, and lack of a common language on many mines.

To get back to the question I originally asked. Do SA miners get a fair wage? Unfortunately I don’t think I have enough information to answer that yet. The numbers above do not factor in South Africa’s cost of living (which is higher than India’s for example).

But I do think my search shows us – once gain – who the main culprit has been. There are many actors involved in the current South African mining crisis, and there are many guilty parties. But none more so than the SA government. On its watch the country is deskilling. And on its watch a small elite is enriching itself. On its watch South Africa’s Gini coefficient – the measure of inequality, has shot up even further since apartheid (10% of the population is raking in 60% of the countries income).

South Africa is thick with the perils of moral hazard. It’s pretty clear that getting ahead is not about merit or hard work but rather who you know and how much of a fuss you can create.

How do we apportion blame to only miners in this dystopian environment?

* PS: When I get a moment I will have a look at the pay of wealthy South africans, comparatively.
** The median wage in South Africa is much lower than one would expect, considering the size of the countries’ GDP. That’s because income is so unevenly distributed, with the bottom 50% of the population taking home less than 8% of the countries income, and the top 10% taking 60%.


Surprisingly coal is the biggest earner for South Africa in terms of mining. Source: SAPA

Related deployments:

  1. Between a rock & a hard place – On South Africa’s strikes, inequality & crisis
  2. UK Guardian on South African ‘corrective rape’
  3. South African police accused of gross abuse of power
  4. South African society & institutions are holding up so far
  5. How violent is the South African police?

12 Responses

  1. L de Beer says:

    Hi,

    Very informative article. I came across your article while reading up for my own knowledge, trying to understand how the top executive salary bill compares to that of the total labour work force. (I rather randomly selected one mining company’s annual report for 2010, realising that a lot have changed since then but I was only interested in order of magnitude). I then made some very rough assumptions to repeat the calc for overall management salary bill (i.e. all non-unionised employees). I wanted to see what sort of salary cut on management’s side would fund the order of increase as demanded recently and using my assumptions I came to a 50% cut (assuming 25% non-unionised = management).

    I am not in the mining industry so I am grossly ignorent of the details and is maybe an order out with my sums, but I am concerned generally with inequality and would love to see SA working with a better life for all, the reason I have not emigrated long ago. Personally I earn a very good salary myself, but in a highly educated, scarce skills industry also.

    Now a 50% cut in one industry alone (let alone one company) will clearly result in all remaining skilled people to run for their lives, but maybe we should as a nation consider an across the board 10 or 20 year plan to reduce the gap over time. Pity we also compete globally and this may just speed up the brain drain dramatically.

    Maybe you could do further research in this line or refer me to same. (There could be plans like that allready, of which ordinary SA’s are not aware of).

    I would also be interested to know how many Australian miners there are in comparison to size of their output, relative to South Africa, to get an idea of the other unintended consequence – increased productivity with more mechanisation but job losses, which seems just as bad if not worse.

  2. Kameraad Mhambi says:

    Hi L De Beer

    You write a lot of sense. South Africa desperately needs to sort out its massive wage disparities. You should publish your finding somewhere. I will be very interested to see what you come up with.

    That management would be required to take a 50% is fascinating.

    We really also need to sort out skills in South Africa, because we are not very productive.

    Your also right in assuming that there’s far less workers in Australian mines. A real conundrum then.

  3. Michael Jaques says:

    It’s good that you mention the fact, that if you compare wages you have to compare the cost of liwing aswell.

    Also my impression is of the kind, that Indias and Chinas (aswell as Brazils) national economies are much more independent and self-sufficient then SA’s.

    Let’s not forget that SA’s mining sector and even parts of other industries have traditionally been controlled by very few powerful companies – it’s better to call them conglomerates. The most famous being of course AngloAmerican and Oppenheimer with many subcompanies.

    They Other countries have (partially) nationalised their resources or at least widened the public control over these.

    To my knowledge AngloAmerican even switched the StockExchange listing from Johannesburg to the London Stock Exchange to escape control by the post apartheid government.

  4. Kameraad Mhambi says:

    Hi Michael

    Yes, China and Brazil’s economies are more self-sufficient than SA’s. But South Africa used to be very self sufficient as well. Bear in mind that the country was almost totally isolated at one point. That had good and a bad aspect to it.

    The great irony is that the Afrikaner Nationalists wanted the country to be as self-sufficient as possible. It’s safe to say that they would never have allowed Anglo, Old Mutual etc to list overseas.

  5. Michael Jaques says:

    Hi Kameraad,

    a couple of thoughts:

    I guess a country that practically enslaves the majority of it’s population by law – like apartheid South Africa did – can be very “self-sufficient”.*

    In this sense Nazi Germany was also very self-sufficient when they forced the Jewish Germans, the Socialists + the Inhabitants of Poland, Russia and other occupied countries, to work in their labor camps to strengthen the war economy. (those that couldn’t do hard labour were put into extermination camps like you know).

    Also: when the western powers finally decided to sanction the apartheid regime in the 1980s, there wasn’t much left of apartheid’s self-sufficiency! (even if the sanctions were very half-heartedly imposed). The economy went down.

    In regards to your comment about relations between the apartheid regime and the conglomerats (big business) – they were air tight! The afrikaans nationalists were dependent on them and the conglomerats were the biggest collaborators and the biggest beneficiaries of apartheid.

    Only when the conglomerats realised that apartheid might harm their business and their reputation disproportional to the advantages it might have (= lawful super-eploitation of totally disenfranchised workers), they decided to abandon the afrikaans nationalists and their backwards bigot policies and search for a more modern approach. Therefor they had to reach out to the progressive spectrum of South African politics (the ANC) and make a deal with them that, would allow them to continue their model of business.

    That’s how much power Oppenheimer/Anglos and Co had and still have – they can effectively change governments!

    *the standard of living for white South Africans was one of the highest in the world during apartheid, because of the extremely high level of exploitation of black labour. That might be the main reason why many white South Africans constantly complain about the conditions in post-apartheid South Africa – they simply lost their privileges of being able to radically exploit the Black people.

  6. Kameraad Mhambi says:

    Hi Michael

    Your presumption that I don’t know SA history is insulting. But hey ho.

    Life, (and South Africa) is complicated, far more so than partisan cliches and one track ideologies allow for.

    For example, during the 1920′s the SA Communist Party lead a strike to keep the colour bar in the mines. Their slogan was “Workers of The World Unite and Fight for a White South Africa.”

    Odd. But true.

    The Prime Minister of the time (Jan Smuts – no bleeding heart), chose the side of international capital, and opened the mines to black workers (who were prepared to work for cheaper than whites). In the process he sent in the air force and tanks and killed dozens of white mine workers.

    It’s complicated.

    To be sure post 48 apartheid was horrid. Especially how it built and entrenched inequality into the town planning and architecture of modern South Africa. That makes inequality so much harder to eradicate.

    But comparisons between Nazi Germany is not only facile, its lazy and wrong. For a start, the TRC reckons 24,000 South Africans died because of political violence from 48 – 94. That number is probably too low. But even if its 30,000, its less than the number of people that has died in Syria in the last two years, and less half the amount that died in Kenya during Mau Mau uprising, and a quater of the deaths in Algeria during their independence war. Lets not even start on Rwanda or the DRC.

    You might say forget the violence. Apartheid’s violence was structural and point to the myriad of racist apartheid laws and you would be right. I also mentioned town planning above. They are despicable. And yes, those laws helped exploitation.

    But something else was also going on. Black South Africans life expectancy and and infant mortality went up dramatically during this time. On the one hand bantu education was inferior, on the other hand, unlike the British, the Afrikaner Nationalists made school compulsory for all black children and built the schools and logistics to make it happen (the current government is not delivering text books).

    Not only that, particularly from the 1970′s to 1994, Asian, coloured and black South Africans closed the inequality gap with white SAfrican’s.

    Why? There was a wealth transfer from white to black under the Nationalists (particularly in 70′s and 80′s – one of the main reasons the Conservative Party was started and supported by white working class SA’s to the right of the National Party). That could have been much better of course. But its simply wrong to ignore this, especially considering whats going on in SA today.

    To my original point. The National Party had a complicated relationship (to say the least) with foreign capital. In the back of their minds were the Boer War its effects and how it was started by the so-called “gold bugs” and racist imperialists. More than 10% of the Boer Republic’s citizens were killed and almost every house burned to the ground.

    After the war destitute Afrikaners were for the most part excluded from access to foreign capital even if they were white. A third of Afrikaners lived under the poverty line.

    And internal to the Afrikaans community theire existed a kind of socialism, in an effort to lift them out of poverty. All Afrikaans schools were state schools, and they were all co-ed. In the country at large there were breadboards, maize boards etc that controlled the price of basic commodities. Their were no private hospitals until the late 80′s, and although inferior even back hospitals provided a superior service to state hospitals today.

    The Nationalists encouraged home grown volkskapitalisme and volks-sosialisme as a counter against foreign influence.

    PM Hertzog built South African industry so not to make it an extraction only economy (to the initial opposition of foreign capital) – but don’t take my word for it. Read Moletsi Mbeki’s book where he makes this exact point. It’s another irony that if it was’nt for the Nationalists SA’s super union Cosatu would not have had as many members, because their would not have been local industry but for the mines.

    Now there is little doubt that the Afrikaner Nationalists used these same laws and apartheid and their own (and foreign) capital to benefit their own. Come 1993 the average Afrikaner earned 70% of his English speaking white compatriot – a massive change in their fortunes. It is true though that they accommodated and never moved against the Anglo’s of this world. And it is true that the Anglo’s of this world came to love the Nationalist regime. But again, that is only part of the picture.

    Unfortunately for those seeking easy answers South Africa is not black and white. We have many shades of grey, and many people doing the right things for the wrongs reasons, and well as people doing horrid things with the best intentions.

  7. Michael Jaques says:

    Hey Ho (?) Kameraad,
    it seems likely that you misunderstood me, since I never tried to implicate that you don’t know anything about South African history. It’s obvious that you deal with the history of SA, especially that of the Afrikaans speaking fraction of the population, a lot!

    I don’t want to get too personal (since I don’t know you personally), but you seem to have a strong white South African/Afrikaaner identity – I guess it plays an important role in your life? Otherwise you wouldn’t feel offended when somebody calls out the past Afrikaaners Nationalist regime as racist, corrupt and inhumane.

    This might partly explain why you go as far as highlighting the Nationalist Party of the 1970ies and 1980ies as a progressive force!!! – at this stage you nearly lost all your credibility.

    Since you were involved in the TRC you got to know that the state under the leadership of the NP intesified it’s repressive machine against any opposition at exactly this time (from the mid-seventies on). This was the time with the highest number of people being killed by the state on protests, during raids into the townships and into the homes of people seeking refuge in the neighbouring countries and in political police detention – often only for voicing their opposition against a criminal political system that willingly disadvantaged the majority of the population.

    There is really not one single point in your comment that would be news to me. (Should I now feel insulted aswell?). Of course I know about the history of the Afrikaans speaking people before they gained political power, especially their struggle against British Imperialism. In our minute of silence for the victimised Afrikaaner people, let’s not forget that the Indigenous / African inhabitants of South Africa were affected severely back then aswell.

    I also know about the racialist approach in the early Communist Party of South Africa and their lobbying for White Proletarism. Who do you think I am? Would I make the effort to read your blog and share my opinion, if I didn’t care about South Africa and her history?

    What you call “wealth transfer” during the 1980s was in fact the failed attempt of the Afrikaaner Nationalists to stabilise apartheid by designing a small black/non-white middleclass who would have an strong interest in upholding the apartheid conditions for their own sake. This is NOT an wealth transfer!

    In fact, I agree with many of the views of Moeletsi Mbeki on problematic aspects of SA’s economy – especially the fact that it hasn’t advanced much from the stage of being mainly an extraction based industry!

    By the way: I do have a problem when a group of people willingly benfits from the legalised exploitation of another group and then self-righteously feels insulted if one names the facts!

    If you are trying to say that black South Africans actually had a pretty good time during apartheid since the good-hearted and holy Afrikaaner people were taking good care of the developement of the helpless primitive natives, then try to explain this to the relatives of people who were thrown out of the upper floor of John-Vorster-Square by the good Christian members of apartheid’s Special Branch like Gideon Nieuwoudt, tortured to death, blown into pieces by mailbombs or randomly shot during protests.

    “It’s complicated” blah blah blah…

    Actually it’s simple: defending the apartheid regime or identifying with it even to the slightest degree makes an individual look really stupid.

  8. Frank says:

    some background on the mining conglomerates:
    http://www.youtube.com/watch?v=Jm7DTCWzRaw

  9. [...] On the other hand as I indicated in this post, South African workers, particularly mine workers are well paid compared to developing country workers. Will our mines survive these [...]

  10. Lasco says:

    Yet we still haven’t come to an answer, how do we reduce inequality between capitalists and workers? Can we actually point to a model in life when the capital owners and those working for them ever got equal access to wealth?

  11. What do you mean by ‘equal access to wealth’? I’m not interested in total equality. Just more fairness.

  12. Dadiggle says:

    Michael Jaques

    Out of 40 years of so called oppresion you come up with 1 example. If South Arfica was so bad and so oppressive why did thousands of refugees scalled barb wired fences cross reserves risk of getting eaten by Lions to sneak in to oppressive South Africa? You sound like a guy who have read about a couple of things of Apartheid in a couple of books now claiming you are specialized in it. Why would white oppressive South Africa sent their 18 year old white kids to protect black people from getting slaughtered? Have you ever go back to think how Mandela and co got Lawyers degrees? Have you ever thought why a Racist oppressive white regime so called killing black people make a nuclear bomb, disarm it voluntary (the first to do so) and build a nuclear power plant for you to heat up your pap and read your bias stories written by a couple of blokes who wanted a piece of the billions De Beers was making? Why was there never a civil war? How many of those killings in that TRC report where black on black killing due to necklace murders? You want to see pictures of it?

    Oh yeah your books did not tell you that South Africa have main tribes such as the Zulu, Xhosa, Tswana, Venda, Ndebele, Sotho, Swazi and the Shangaan/Tsonga people. But it does not stop there, because these main tribes consist of smaller tribes. For instance the Xhosas are made up of Mpondo, Fingo, Thembu, Bhaca, Nhlangwini and Xesibe tribes. The Sothos are made up of North Sotho (Bapedi) and South Sotho (Basotho) tribes. The Tswanas are only a part of the main tribe known as the West Sotho. Other tribes that make up the West Sotho are the Kwena, Kgatla, Tlhaping, Tlharo, Rolong and Ngwato. Have you ever cared to go and do research on the backgrounds and cultures of these tribes? I d o not think so. You are basically the same as UN and three quarters of the world witnessing 2 million people getting slaughtered because two tribes cultures did not like eac other and the live in close proximity to each other. Then you go scratch your head and think how did it happen how could it been avoided? Throw them all together otherwise its racist is the thought. Well guess what in the real world some people can not get along with each other. Its just life and its like that. Israel Palestine. Get to grips with it. Stop saying Afrikaner Afrikaner. Hope your not one cause your slegter than slangkak I believe. Get your facts in order.
    SA producing so many percent of whatever from whatever mine is no benefit to SA because De Beers and Anglo American is getting richer not South Africa.