Johannesburg - South Africa’s longest wage strike ended yesterday after thousands of Association of Mineworkers and Construction Union (Amcu) members voted in favour of the final wage offer five months to the day after they downed tools for a R12 500 basic wage for the lowest-paid underground employees.
In a sign of relief, the rand rallied to R10.56 after the news that the mineworkers had voted in favour of the deal, from R10.66 earlier in the day. At 5pm it was bid at R10.6150 to the dollar, 9.98c better than on Friday.
Shares of the three major platinum producers made modest gains because a resolution had largely been priced in.
Even though this deal has happened, the damage is likely to last for years. Most immediately, the strike has dented economic growth and its effect on mining output was the main reason why gross domestic product contracted by 0.6 percent in the first quarter.
The strike lingered almost to the end of the second quarter, aggravating the situation in production and economic activity and taking the economy to the edge of the recession precipice.
At the Royal Bafokeng Stadium outside Rustenburg yesterday, Amcu president Joseph Mathunjwa told thousands of members – clad in union T-shirts and blowing vuvuzelas – that the agreement would be signed today.
Employees are expected to begin to return to their workplaces tomorrow.
“Platinum will never be the same again… What other unions could not do in more than 20 years, you could do in five months,” Mathunjwa said.
“Some of the workers will receive R12 500 before the end of the agreement.”
Amcu agreed to a settlement comprising annual increases of R1 000 over three years for the lowest-paid underground employees as from July last year.
The employees will be entitled to back pay of R1 000 from July last year to January 22 before the start of the strike. This means that each employee will receive about R2 000 a month on his or her basic salary.
The union accepted an in principle agreement 10 days ago but it presented additional terms to the companies. Individual meetings were held with the producers to iron out the terms, and some have been met.
Among them, Lonmin agreed to reinstate 235 essential services employees who were fired last month for striking.
Anglo American Platinum (Amplats) has agreed it will withdraw its R600 million civil damage claim against the union. Criminal charges against employees will be discussed when employees return to work.
Amplats had also agreed to offer support to employees, including providing food parcels and health supplements, said Mathunjwa.
At Lonmin, back pay will be paid within seven days of workers returning to work through vouchers administered by Teba, the company that focuses on recruitment for the industry.
Peter Montalto, an analyst at London-based investment bank Nomura, said that the increases were nothing like what Amcu was after.
“In this sense it failed in its core mission. However, it has laid a template for a lengthy strike sustained by intimidation for still very large and unaffordable increases being agreed to and the precedent of back pay is now firmly set.”
Companies and Amcu have suffered significant losses and production will return to normal only at the beginning of the fourth quarter.
According to a website run by the producers, companies have lost R24 billion in revenue while employees have forfeited R10bn in wages in the strike, which started on January 23.
“The costs involved to the companies will, in our view, prompt significant restructuring over the coming three-year period,” Montalto said.
“The fall in the platinum price now also complicates matters for the mining companies.” - Business Report