Biggest South Africa Gold Union Rejects Pay-Increase Offer

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The biggest union in South Africa’s gold industry rejected a pay-increase proposal by the country’s largest producers, a lobby group for the companies said.

The National Union of Mineworkers, which speaks for about 52 percent of employees at companies including world No. 3 producer AngloGold Ashanti Ltd., and the Solidarity union rejected the offer, said Elize Strydom, chief negotiator for the producers at the Chamber of Mines. Most members of UASA accepted, she said.

“We will be meeting again next week for two days to communicate further,” Strydom told reporters in Boksburg, east of Johannesburg. The Association of Mineworkers and Construction Union, which is the second-biggest representative and also rejected the offer, will be present at the talks, she said. Three senior independent facilitators will lead the mediation on Aug. 12 and 13, the producers said in a statement.

Gold has dropped 9.2 percent since wage talks started June 22, touching a five-year low and hurting companies already contending with higher output costs. In the proposal that was rejected, producers cut the wage-deal term to three years from five and said they would increase basic pay by more than before.

‘An Allowance’

The offer would have meant increases of as much as 11 percent for Harmony Gold Mining Co.’s lowest-paid workers and 13 percent for Sibanye Gold Ltd. and AngloGold employees in the first year. South Africa’s inflation rate was 4.7 percent in June. The higher pay wouldn’t have translated into more benefits, and would only apply if all four unions had agreed to it, the companies said.

“We have rejected the offer on the basis that it’s an allowance and not a wage increase,” Tafa Moya, a coordinator for the NUM, told reporters. “We are here to negotiate for wage increases and our members will only accept if it’s an increase.”

The South African gold industry wants to avert a repeat of a strike that crippled the world’s biggest platinum mines for five months last year.

“It is possible that we will strike if our demands are not met,” NUM General Secretary David Sipunzi told reporters. “It is one of the tools we use.”

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