South Africa’s Gold Mining industry began its wage negotiations last week.

The key players:

The Chamber of Mines (CoM) – representing the collective interests of the Gold Mining Companies (or, at least, around 7 of the big ones)

The National Union of Mineworkers (NUM) – representing the collective interests of 65% of workers in the Gold Industry

The Association of Mineworkers and Construction Union (AMCU) – representing 17%, alongside a keen and acute interest in gaining that other 65% currently subscribing to NUM.

The background:

A collapsing gold price (bad for gold mining companies)

Higher energy costs (bad for gold mining companies)

Deeper and more difficult-to-extract gold deposits (bad for gold mining companies)

Shitty labour productivity (bad for gold mining companies)

A weaker Rand (good for gold mining companies!)

The opening bids:

CoM – a 4% increase across the board

NUM – a 60% increase for some, a bit less for others

AMCU – a 100% increase in the wages of entry-level workers

Reactions to the opposing offer:

CoM – “It bears no basis in the current economic reality.”

NUM – “It wags a middle finger at the workers.”

AMCU – ominous silence.

Since then:

CoM – upped its offer to 5%

NUM – declared a dispute

AMCU – requested more information from the CoM before deciding its next move

To put this in perspective, let’s just look at AMCU’s actual demands, bearing in mind that current entry-level gold workers earn around R10,000 ($1,000) per month, which includes a R5,000 basic, along with housing allowances, medical aid, and other benefits:

  • an entry-level minimum basic of R12,500 for underground workers, and R11,500 for surface workers
  • housing allowances of R6,500 per month
  • living-out allowances of R4,000 per month
  • a transport allowance of R4,000 per month
  • operators are to receive an extra R1,500 per month (R2,000 for rock-drill operators)
  • resident allowances of R2,000 per month
  • 9 months of maternity leave at full pay for female miners
  • a R30,000 funeral benefit to be paid to each employee
  • 70% employer contributions to medical aid
  • a R50,000 minimum on severance pay, along with a further R20,000 for “life-skills training”
  • a service increase of 2.5% on the anniversary of employment

So if you’re a first-time, unskilled, entry-level underground worker, AMCU is demanding that you be paid an executive package. Or something close to it.

And now, because similar demands were met in the Platinum industry after the Marikana fiasco last year, the unions are preparing to strike. Presumably, it will get violent. Because, well, that worked last time.

Which also means, just as inevitably, that the gold mines will engage in a round of retrenchment almost immediately after that.

And the question to be asked is: to what end?

TO WHAT END?

Trade Unions are economic extremists

Generally speaking, I think that there are merits to most economic arguments. Like some kind of New Age economic hippy, I am happy to accept that the various tenets of Keynesianism, Monetarism, Libertarianism, Marxism and the rest all carry some truth and give some insight into human behaviour. Sometimes, those truths are impracticable. And they are almost always paradoxically discordant.

In fact, it’s almost because they’re discordant that I feel like they’re true. Just look at the whole “is light a particle or a wave” debate in physics. Or Schr√∂dinger’s cat. The Universe is filled with paradox and contradiction*; so there is room in my belief system for seemingly-conflicted economic viewpoints.
*sometimes, it seems like there is only paradox and contradiction.

But despite that fairly-encompassing heterodoxy, I have no room for political trade unions. Mainly because politicised trade unions are to economics what the Westboro Baptist Church is to Christianity: self-righteous unquestioning hate groups. Their initial principle may have been fine – but somewhere along the way, they got ugly.

The Origins of Trade Unions

During the Industrial Revolution, Europe turned into a conveyor belt of production, drawing in children, women, and the unskilled. Factory owners rapidly realised that their workers were:

  1. replaceable; and
  2. desperate.

So wages and working conditions became something of a deplorable human rights abuse. Naturally, the workers began to band together to try and develop some form of collective bargaining power – because having one replaceable person threaten to quit is a lot easier to ignore than your entire factory staff standing up to you. And it’s difficult to push for a more reasonable wage when the guy next to you is happy to work for less.

When Trade Unions exist to:

  1. protect worker rights; and
  2. form a clear position from which to argue wages

Then that’s a positive thing. For everyone. Because there is a symbiotic relationship in play here – employers need employees to work, while employees need employers to be entrepreneurial about keeping the enterprise going.

Employers were extorting workers in a way that was not sustainable for the economy as a whole – so something had to be done.

Where It (and Everyone) Works

Here is what a wage bargaining table should sound like:

Employer: we’re prepared to offer an inflation-linked increase, because we’d like you to work in the same way that you worked last year. You were happy to work for last year’s wage. We know that inflation has affected that – so we’ll adjust for it. We believe that offer is fair. What are your thoughts?

Trade Union: we would like to press for a wage increase of inflation plus 10%. Our members, after consultation, believe that they can increase their productivity by 10% after the training that we offered them in better time management. This will benefit your bottom line, and they would like to be compensated for that.

Employer: we’d appreciate that, but we’d like to see that in action. Can we agree on an inflation plus 5% increase, with a guaranteed bonus equivalent to that other 5% if those performance targets are met?

Trade Union: sounds good to us.

There is reasonability and fair trade. The employer offers a wage, the workers (through their union) offer a service. Their service can be negotiated and justified.

Where It Goes Wrong

Here’s the problem:

Trade Union: YOU WILL PAY US DOUBLE. YOU WILL GIVE US WHAT WE WANT OR WE WILL GO ON STRIKE.

Employer: But we can’t give you that! 40% of the mines are already unprofitable. If that cost increases based on what you’re asking, we’ll have to shut the mine, and then everyone will lose.

Trade Union: WE SEE YOUR FANCY CARS AND HOUSES IN SANDHURST. YOU WILL GIVE US WHAT WE WANT OR WE WILL STRIKE AND BURN TYRES.

Employer: Even if we took the value of those cars and houses, and tried to split it amongst you, you’d only end up with a small amount of money. But the problem here is the mine where you work. We can’t run it if you insist on these wages. We will have to retrench some of you.

Trade Union: YOU ARE NASTY COLONIALS TRYING TO IMPOSE YOUR CHEAP TACTICS ON OUR WORKERS. YOU WILL GIVE US WHAT WE WANT OR WE WILL TAKE IT FOR OURSELVES. AND YOU WON’T FIRE US.

Employer: You can’t ask us to pay you what we do not have under the threat of violence. That’s extortion. And theft!

Trade Union: *strikes*

It appears that the extortion has flipped.

And, more importantly, I think we forget that Trade Unions are actively against measures to decrease unemployment – because decreasing unemployment by decreasing wages, or hiring non-unionized workers, or liberalising trade laws, or decreasing the high contributions to pensions, is “detrimental” to existing union members.

Trade Unions do not serve the greater needs of society, whatever the rhetoric might say. They serve the needs of a limited few.

Does that not sounds like an economic crime?

Why They’re Like Westboro

Has anyone actually been onto the Westboro Baptist Church website? It’s called www.godhatesfags.com. On the home page, there is a “theological” explanation as to why the tagline “God Hates Fags” represents the full theological truth of God’s work in the world. There is also a ticker in the lefthand sidebar that counts up the number of people that God has damned to hell since you logged onto the site. And there’s a helpful picketing schedule for all those funerals.

Hatred has not just replaced the Christian principles of love, compassion, inclusion and joy: it has annihilated them.

In the same way, Trade Unions were intended to establish the groundwork of fairness and negotiation and the balance of bargaining power.

To me, it seems that many Trade Unions have now become engines of envy, although it’s masked as self-righteous “preservation of dignity” and “economic equality”.

Where’s a Margaret Thatcher when you need her?