South African Gold Miners End Strike with Above-Inflation Wage Deal

Strategic Insights -

South African gold miners returned to work after signing a new wage agreement that will see pay rises almost double the rate of inflation. The agreement, which took effect on Tuesday, will see miners receive a 8-10% pay increase over the next two years, depending on their level of experience. The strike, which began on Thursday, involved around 200,000 miners from two major unions and had significant implications for the country's economy.

Key Takeaways:

  • The strike, which lasted for around a week, resulted in the loss of 500 kilograms of gold output for Harmony Gold Mining Co.
  • The strike was part of a series of strikes in South Africa over the past month, which has led to a drop in manufacturing and a potential lowering of the country's gross domestic product growth for the year.
  • The mining unions and gold mining companies signed a two-year agreement for a rise of between 8% and 10%, depending on the level of worker experience, the union Solidarity said.
  • Unions are still negotiating with platinum miners and the utility Eskom Holdings Ltd.
  • The strike affected companies including Anglo American PLC, AngloGold Ashanti Ltd., Gold Fields Ltd., and Harmony Gold Mining Co.
  • South Africa is the world's fifth largest gold producer.
  • The strike had significant implications for the country's economy, with economic data showing a drop in productivity and a two-year low in factory activity.

Statistics:

  • 200,000 miners participated in the strike
  • 8-10% pay increase over the next two years
  • 500 kilograms of gold output lost due to the strike
  • South Africa's GDP growth forecast is 3.5-4% this year
  • July's factory activity fell to a two-year low
  • Productivity drop due to strikes

Sources:

  • Dow Jones Commodities News via Comtex, Aug 02, 2011
  • Absa Group Ltd., Tuesday forecast
  • Bureau of Economic Research, July's factory activity
  • Kagiso Group, poll released Monday
  • Solidarity, union statement
  • Devon Maylie, Dow Jones Newswires, +27 11 783 7848, devon.maylie@dowjones.co
  • Chamber of Mines, statement
  • Dow Jones Newswires, 08-02-11 1059ET