Expert: Lonmin strikers scored

Sep 21 2012 16:47

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Lonmin plc [JSE:LON]

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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - The six-week Lonmin [JSE:LON] strike was one of the few extended stay-aways where employees actually benefited from downing tools, an expert said on Friday.

Efficient Group chief economist Dawie Roodt said Lonmin workers had avoided losing more than they gained from the work stoppage, which was the most common occurrence following the resolution of a strike.

"This is one of the few instances where workers have been able to break even... or are slightly better off," said Roodt.

"What usually happens is that the strike normally erodes the nominal benefits. What it illustrates is that the increase was really substantial."

Workers at Lonmin's platinum mine in Marikana were granted a 22% pay rise and a once-off bonus of R2 000 each to return to work.

Roodt said the 22% was in reality a 12% raise on top of a 10% increase that was already in the pipeline.

Workers lost a maximum of approximately 12% of their annual wage during the strike, at 2% a week, he said.

If the R2 000 once-off payment was included with the wage increase, it appeared workers had gained, making the strike worthwhile.

Chris Hart, senior economist at Investment Solutions, said the way the strike was resolved had implications for South Africa's economy and labour market.

"First, an enormous leap in costs because of what happened at Lonmin will be replicated across the mining and the manufacturing sectors. Already those industries are struggling for investment," he said.

"The big concern was that this took place outside the bargaining process."

The second implication was the number of jobs that would be lost in the medium- to long-term, with the viability of the mining industry being in question.

Hart said investor viability would have been affected, with South Africa being seen as an unreliable supplier, with the possibility of sources being developed elsewhere in the world.

"Even a tiny platinum discovery (elsewhere) will be developed instead of investing in South Africa."

Roodt said that the Lonmin settlement had set a bad precedent.

"Other workers are going to see this, and (believe) if they put (up) enough pressure, companies are going to give in. The monetary incentive may lead to more wildcat strikes."

He said any potential take-over of Lonmin was risky, considering that management and workers had reached a type of truce, with investors having to believe they were getting a bargain.

The strike ended this week, when workers and the company reached a pay agreement.

In terms of the agreement, the lowest paid worker would earn R9 883 a month and the highest, R13 022.

Illegal strikes have spread to other platinum and gold mines in the country following the start of the strike at Lonmin on August 10 and during which 46 people died - 34 of them shot dead by the police.

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lonmin  |  dawie roodt  |  chris hart  |  mining unrest



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