Mining sheds jobs and mothballed mines unlikely to be reopened
More job cuts are inevitable in the mining industry, and it's unlikely those jobs will ever be replaced.
With the industry bleeding 1200 to 1500 jobs a month, according to Connie Prinsloo, Solidarity's deputy general secretary for mining, workers should not expect to be rehired, as happened previously when the commodity cycle improved.
In previous commodity cycles, mining companies retrenched in the downturns and rehired workers when the economic environment allowed.
Some workers at AngloGold Ashanti, which has begun a retrenchment process, spoke recently of being retrenched and rehired two or three times over the past 20 to 30 years.
This is no surprise as mining companies put some operations on care and maintenance when commodity prices are weak and ramp up production when prices turn around.
However, in the past five years, during which the industry has retrenched about 14% of its workforce - 70000 workers - mines placed on care and maintenance have rarely reopened.
Prinsloo said unions tried to negotiate rehiring deals with companies in case a mine reopened, but there were no guarantees, especially with a dwindling mining sector, slow economic growth and now a detrimental Mining Charter.
Joseph Montisetsi, National Union of Mineworkers deputy president and a former AngloGold Ashanti worker, said he was aware of cases in which individuals would make a deal with company officials to be retrenched and rehired in order to get access to their pension fund. However, it was irresponsible to do that and the union was against it.
"It's because of the socioeconomic situation of the workers, and their indebtedness. Given the situation right now, people feel like they are in debt and can't survive and they want a supplement or cash to settle the debt. So they get the pension funds," Montisetsi said.
The companies benefited, he said, because when a mineworker was rehired he often got paid less. Then he had to start from scratch building a pension.
Prinsloo said it would be irresponsible for companies to retrench and then rehire workers because they needed access to their pension or provident funds.
He said you would always find people who would accept a voluntary retrenchment package for access to their pension funds, but they would have to start from scratch if rehired, which would be a financial setback for the worker.
Mineworkers are often vulnerable to unscrupulous lenders, which leaves many of them in debt.
Chamber of Mines spokeswoman Charmane Russell said that in 2012, an industry-level task team was set up to look into the indebtedness of employees and although there were no figures, "it is very clear that companies' efforts have begun to make a huge impact in this area".
Company efforts included improving employees' financial literacy and managing emolument attachment orders - which force employers to deduct repayments for debt but in some cases are not correctly issued by the courts.
Makwe Masilela, an analyst at BP Bernstein, said when mines were rehiring, unemployed workers were not in a strong position to negotiate and often took any vacancy that was available.
Some of these positions were inferior to the job the mineworker had lost, even being entry-level jobs, so they came with lower salaries.
"For the employee, it's difficult because you don't know if you will be rehired, and you don't know when.
"Most of our workers don't have any savings, so the minute they get retrenched they start using the retrenchment package."
When that had dried up, "you'll start digging into your pension", Masilela said.
There were positive signs for the industry such as a modest pick-up in commodity prices, especially gold, but "this is not yet convincing enough that we are going back into a boom", he said. When there was an upturn there would not be a lot of rehiring because if the Mining Charter were implemented in its current form it would add to a company's costs, which would reduce the number of workers who could be hired.
Mines are cutting staff. AngloGold Ashanti is in a section 189 process with 8500 jobs at risk due to the closure of its Savuka mine, and the Kopanang mine due to be placed on care and maintenance. The mines are unlikely to be reopened.
Prinsloo said there would be no recalls if the situation prevailed. "You cannot save all 8500 jobs but the goal is to minimise retrenchments."