UNDERMINING LABOUR:

MIGRANCY AND SUB-CONTRACTING IN THE SOUTH AFRICAN GOLD MINING INDUSTRY

by:

Jonathan Crush, Theresa Ulicki, Tke Tseane and Elizabeth Jansen van Vuuren

Southern African Migration Project

Migration Policy Series No. 15

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EXECUTIVE SUMMARY

The South African gold mining industry has been in crisis for over a decade. A stagnant gold price, declining reserves and escalating costs have led to major restructuring. Downsizing and large-scale retrenchments have devastated the mines and sending areas. Since 1987, the industry has shed over 50% of its workforce. However, growing numbers of retrenched miners have been re-hired by sub-contractors, often to do the same job at greatly reduced pay. The proportion of the gold mines' workforce now working for contractors is estimated at 10% and growing.

The sudden rise of sub-contracting on the South African gold mines took most policy-makers and independent observers by surprise. The National Union of Mineworkers (the NUM) sees the growth of sub-contracting as an enormous threat to its power and to worker rights. Since 1995, it has been seeking to develop a coherent and effective response to the challenge of subcontracting.

In 1995, the NUM and the Chamber of Mines reached an agreement on information sharing on sub-contracting. The agreement has never been implemented. As a result, there is little reliable information about the character dimensions and impact of sub-contracting. Neither party can even supply basic figures on the numbers of contractors on the mines nor the numbers of workers employed, Basic information on which to build sound policy responses is completely absent. The main players seem to know, or will admit to knowing, very little. Government knows even less. Neighbouring states that depend on mine migrancy to South Africa are also in the dark.

The Southern African Migration Project (SAMP) believes that sound and reliable information on the whole sub-contracting phenomenon is urgently needed. In 1997, SAMP initiated a research project on sub-contracting and the regional labour market in order to provide the major role players with information and insights on the impact of sub-contracting. Phase One aimed to document the dimensions and trends of sub-contracting operations, to examine the corporate organization of sub-contracting and to explain its rapid growth in the industry.

Phase Two explored the sub-contracting working conditions and experiences of ordinary miners. Lesotho was chosen as the field-site because of its accessibility but also because, along with Mozambique, it is the major foreign source of cub-contracted labour for the mines. In 1997, SAMP conducted a "companion" survey of ordinary miners in Lesotho. The resulting database makes it possible to compare regular and sub-contract workers to try and gauge whether sub-contracting is leading to a decline in wages and working conditions.

This report tests five hypotheses about sub-contracting in the mining industry. To do this, we conducted in-depth interviews with a sample of Basotho miners employed by sub-contractors. These were supplemented by interviews with recruiters, managers and sub-contractors themselves.

Hypothesis One: Contractors do not have to train their workers, since they can recruit the retrenched miners who have been laid off in such numbers over the last decade

Sub-contract employment is a relatively new experience for most miners, by many sub-contract workers are vastly experienced as miners. Nearly two-thirds of the sub-contract workers have been employed on a regular mine in the past, which confirms the general hypothesis that contractors prefer experienced miners. The average number of total years of mine experience is 10 although 61% have served 10 years or less. However, we found that just over a third of sub-contract workers were "novices" with no previous mine experience when they began working for a contractor. Thus contractors do hire new workers without any prior mine experience. The main reason is that experienced miners have expectations from their previous jobs, which can lead to greater work dissatisfaction.

Hypothesis Two: Sub-contractors prefer workers from neighbouring countries since they have fewer alternatives, are more vulnerable, and are likely to accept wages and working conditions that South Africans shun

Sub-contractors hire their labour in three ways: directly, from labour brokers and through The Employment Bureau of Africa (TEBA). Most sub-contractors employ a mix of workers from different areas. The larger contractors tend to favour workers from Mozambique and Lesotho. Companies involved in core production activities also recruit from areas where there are retrenched miners with the necessary skills, especially in these two countries. The proportion of foreign labour in the sub-contracting sector is rising and is now just over 30%. This is still well below the figure for the regular workforce (50%). Many smaller contractors draw their labour from within South Africa.

It is difficult to determine to what degree the sub-contracting sector is involved in the hiring of "undocumented" or "illegal" migrants. The NUM regards it as a serious enough problem to demand that the practice cease. Logic, however, suggests that it is probably less pervasive that in other sectors, such as the construction and agriculture sectors. Unlike these sectors, the mining industry has legal and unfettered access to foreign workers from outside the country.

Hypothesis Three: The pattern of employment of sub-contract workers is highly unpredictable, irregular, insecure and unstable

In 1998, there were 30 TEBA-registered contractors with 20 or more Basotho employees. The rate of attrition and new entry of companies into the Lesotho labour market is high. Very few companies have a clear majority of Basotho workers. The number of Basotho employees varies considerably from contractor to contractor and with any one contractor over time, with dramatic swings in employment level from month to month and year to year. The high turnover of contractors and the dramatic fluctuations in recruiting levels indicate the fundamental lack of employment security experienced by sub-contract workers.

The interviewees had been employed for an average of 2.4 years with their current or last contractor, although the duration of employment ranged from one month to 18 years. While 45% of the sample were employed at the time of the interview, the remainder had been without jobs for an average of 16 months. A third sample had worked for contractors for one year or less and 64% had worked for only one contractor. As many as 40% had had to move from one mine to another, depending on the work available to the contractor employing them.

The uncertainty of employment in the mining industry - especially when working for a contractor - is acutely felt when workers are retrenched. The vast majority received no severance package when retrenched, and almost half were given no notice and were required to leave the workplace and hostels within a matter of hours. Mines typically give workers a month's notice. Only 14% of those retrenched by contractors were given at least one month's notice.

Hypothesis Four: Working conditions and compensation for sub-contract miners are significantly worse than for regular miners

Some 83% of respondents recall signing (fingerprinting) a contract, but as many as two-thirds charge that they were not advised of the terms of their contract before beginning their job. Miners complain that they are not paid the wages they are promised, they do not get the stipulated benefits and bonuses, and accommodation is not available as agreed. Recruiters may encourage contractors to meet certain standards, such as providing death benefits and a minimum wage, but there are no minimum standards that are required before they will recruit workers.

The low wages are a primary and persistent source of complaint. In addition, 52% of the respondents claim that they are routinely paid late and 10% state they are not paid in full. As many as 61% feel that sub-contracting has had a negative effect on household finances and many men report that they do not earn enough to provide the basic necessities for their families, such as clothing and education.

Given the skill profile of sub-contracted workers, we might expect that average earning would be higher than those of regular miners. However, 68% of sub-contract miners interviewed earn less than R800 per month (compared to 48% of regular miners). Some sub-contract workers do have to opportunity to out-earn their regular counterparts through working longer hours and productivity bonuses; 20% of sub-contract workers earn more than R1 200 per month compared to only 10% of regular miners.

Miners consider productivity bonuses as simply another form of exploitation. About 70% say that they do not receive production bonuses. Of the remainder, some comment that they are paid very little in the way of bonuses, receive bonuses infrequently or are promised bonuses that they never see. Many miners state that dangerously long hours are prerequisite for earning production bonuses.

Sub-contract miners not only have to contend with wages below the poverty datum line, supplemented by uncertain or non-existent bonuses, but their wages are often paid late. Such delays cause numerous difficulties for miners and their families in Lesotho.

The respondents reported that they do not receive the following benefits: medical aid (74%), sick leave or injury compensation (64%), a pension (81%), severance pay (82%), free safety equipment (76%), death benefits (69%). Many do not even know whether they are entitled to any of these benefits.

The long hours and the dangerous conditions of sub-contract work lead to serious health and safety risks. These risks are taken in an environment where there is a lack of medical benefits, inadequate or non-existent compensation in the event of injury or death, and such exploitative practices as dismissal in the event of injury or sickness. In addition, many contractors are deliberately ignoring aspects of the new Mine Health and Safely Act (1997).

Regular miners are able to send home much greater amounts than sub-contract workers. The latter send money home sporadically throughout the year when they feel they have amassed enough to make it worthwhile. Households of sub-contract miners cannot rely on this income stream. Only 54% rely exclusively on mine wages (compared to 78% of regular miners' households).

Legal and transportation changes in the last decade mean that miners can go home more often. About 60% of miners now visit home at least once a month; but only 35% of sub-contract miners have the means to do so. The cost of regular journeys home often equals or surpasses the money they usually send home or even their salary itself.

Overall, the working and employment conditions of sub-contracted mineworkers are inferior to those of regular mine employees. Some groups within the gold mining industry cite sub-contracting as an efficient use of human resources, which results in higher productivity, labour flexibility and cost cutting.

Hypothesis Five: The rise of sub-contracting has a negative impact on work-place relations and adversely affects the ability of the NUM to secure and advance worker rights

Basotho migrant mineworkers regard the conditions under which they work as exploitative. The vast majority claim that they are working for contractors only because there are no other jobs and they have to support their families.

Sub-contracting is clearly damaging to the union. It produces new tensions within the NUM between regular and sub-contract miners, and between union members and ex-union members. Retrenchments and sub-contracting contribute to the decline in union membership. Sub-contracting also affects the way that mineworkers perceive the NUM as a structure that benefits them. About two-thirds of respondents are not union members (compared to 11% of regular miners). About 70% report that union participation is discouraged by the contractor for which they work; 40% claim workers are dismissed if they join a union. Nearly half (48%) believe that the NUM has made no attempt to assist sub-contractors' employees. Some mineworkers are bitter that the NUM has not played a more effective role in alleviating their plight.

The introduction of sub-contracting at mines sometimes leads to hostility, and even violent conflict, between regular mine employees and sub-contracted miners. Miners feel that contractors undermine the basic employment standards they have attained and that their jobs may be the next to be sub-contracted. Only one-quarter of the men we interviewed said they had satisfactory relations with regular employees; some 73% maintain that relations are conflictual.

 

Our analysis leads us to accept the last three hypotheses and to accept the first two with qualification. In conclusion, this study makes a number of policy-related conclusions and recommendations for dealing with the rapid growth of sub-contracting.