Mining Sector Wage Structuring

Abstract

Wages and salaries are the key factors that determine labour cost for employers and they are source of income to the employees. This information is critical to policy guidance and relevant in the day to day business decision making. Wages and salaries are not protected to international competition based on inflation and the fluctuation of the currency. Not only workers contest with fellow colleagues on domestic labour markets and better income, but also compete with foreigners. Even though international competition fills the skills shortage but worsens the gap along other dimensions. Countries with an open labor are mostly affected by the circumstance of international competition (Tong, 2012). South Africa is a country plagued with unemployment and poverty, and is a desperately unequal society. An enormous percentage of the South African population is either not working or if they are, they are in the informal sector where salaries are generally low. If you compare South African miner’s salaries to major developing world countries, such as China and India, then South African miners are not doing too badly in the pay stakes, and they appear to be earning slightly more than some of the Chinese and Indian miners. At around R 6 000 a month (which is roughly $ 730 per month) they are in a better position than many other miners in developing countries. However when you compare the salaries of South African miners to developed countries such as Australia, Canada and the USA, then South African miner’s salaries really are dismal (Kihn, 2012). To put things into perspective, according to the results of a salary survey, a miner in Canada with 6 – 10 years’ experience will earn a base pay (excluding benefits) of around $4150K (R53,610.64) a month. This is nearly six times what a miner in South Africa would be earning. Whereas if you compare the salaries of professional, skilled workers in South Africa, such as an Engineering Manager, they would be earning roughly the same, as what they would be earning in Canada (Kihn, 2012). The mining industry in South Africa is one of the main contributors to the economy. The Department of Minerals and Energy estimates that until 2007 gold contributed to 5.4% of the country’s GDP, and South Africa produces nearly 90% of the platinum metals on earth, 80% of the manganese, 73% of the chrome, 45% of the vanadium and 41% of the gold (Department of Minerals and Energy, 2009). The industry attracts migrants from various parts of the country and from other countries in the region. It is estimated that about 60% of workers in the mining sector in South Africa are from neighboring countries, mainly from Lesotho, Mozambique and Swaziland (Mining Sector Report, 2010).