Wednesday, 26 September 2012

Strikes - a living wage and Europe's glass house

Let's cut the bull for five minutes and call a South African spade a shovel.

  1. The government has failed. Service delivery; job-creation and an improvement in living standards has fallen short of the political promissory note. Paradoxically, the ensuing leadership vacuum has given intellectually questionable and morally obtuse opportunists the platform to fuel discontent.
  2. Government excess and nepotism is no different or more morally corrupt than the culturally entrenched nepotistic employment practices and excesses common in the private sector. 
  3. The unions have lost relevance. NUM, in particular, has forfeited control; lacking the strategic vision, leadership qualities and structural continuity to motivate effective collective bargaining. When dialogue fails, militant violence must follow.  
  4. The strikes in the mining and transport industry are tangible manifestations of the current misalignment between the expectations of the general population and the ability of the country to service those claims. The private sector, specifically those companies structurally confined within the geographic region, lacks the margin to pass on a higher wage bill to consumers. The cycle intensifies when consumers themselves face further cost-push realignment; usually a down-scaling.
  5. Education is neither pragmatic nor sufficiently preparatory for effective participation in the global environment. The negative economic consequences of the largely defunct educational system will emerge in the next decade, effectively negating an entire generations' creative potential.
  6. Structural inadequacies and largely porous borders strain the rule of law, promoting violence, ethnic mistrust and racial bias.
  7. Publicly reported remuneration excesses in the formal private sector fuels the corporate culture of personal gain and systematic asset stripping at the expense of longevity and so on and so on...
Notwithstanding all of the above, the South African situation is not much different from the structural failures in both Europe and the US. European corruption, nepotism, ineffectual leadership and the emerging militancy of its populace is neither imagined nor surprising. Political ineptitude, tax evasion and corporate excess at the highest levels is systemic. 

Critically, although most condemn the associated violence, you could argue that the strikers demanding a living wage are correct in their claims that hitherto local and now internationally domiciled mines have been stripping this country's assets for far too long. Is there a case to pursue a national policy of resource-ownership? Why not rather pay contracted mines for their extraction skills, infrastructural spend and intellectual capital and pay them generously? Market the refined, rather than the raw product, through a state-owned central hub managed by the private sector, also contracted and paid generously. Strategically viable? Yes. Socially acceptable? Perhaps. Timeous and innovative? Definitely. 

At its core South Africa's mineral wealth, currently residing in the corporate / capital structures of Europe, has not made her people prosperous and you don't have to look too far to see why. 

Friday, 21 September 2012

The 'upside' for SA mines

Some time has passed since that fateful Thursday afternoon at Lonmin's Marikana mine. Without abrogating from the human-tragedy, you have to ask whether Father Time has finally caught up with SA mining companies? I think it has. Here's why.

Productivity in the mining industry is a measurement of sale-able tonnes per man year (tpmy). ie: the number of tonnes mined / sold averaged across the labour-force.

For illustration - a coal-mining comparison between South Africa, USA and Australia. Sale-able tpmy for the three countries aggregated across underground and surface-mining for each country is as follows:

USA - 9000 tpmy*
Australia - 7000 tpmy*
South Africa - 3000 tpmy*

*Although the data is fairly dated, the ratio holds true. South Africa's productivity figure is less than 50% of Australia's figure and or 33% of the USA figure.. Some small anomalies aside, the discrepancies in productivity, particularly in South Africa's case, is directly related to technology and work-practice. The SA mining industry's objective of job creation and or maintaining employment at the highest levels (whilst remaining profitable), although commendable and encouraged at State-level, is under the current circumstances, unsustainable.

The associated physical and psychological trauma from mine violence and intimidation respectively must, sooner rather than later, reverse the current labour-intensive work-practices in favour of technology. The ensuing elimination of jobs by SA's largest employer will be, undoubtedly, the single worst economic tragedy this country will face, this century, thus far.