The dispute, which left at least 44 people dead and more than 70 injured, erupted after a group of drill operators employed by London-listed Lonmin demanded substantial wage increases amid a turf war between rival unions.
In the aftermath of these events, we asked the following questions to our South African experts:
What can South African policymakers do to defuse the tensions between mining companies and their employees?;
And how has the violence at Marikana affected South Africa’s country risk?
They responded as follows:
Julius Agbor: Africa research fellow, Brookings Institution:
“To diffuse the current tensions between mining companies and their employees, South African policymakers can begin by facilitating a broad-based concertation regrouping mining companies, labour unions, parliamentarians, social workers and elected representatives of employees of all major mining firms.
“It’s important for employees to be represented at these meetings by their own elected representatives, given the current mistrust between unions and workers.
“The parameters of such concertation should amongst others include: negotiations on a realistic wage-increase rate consistent with current inflation and productivity levels in the country. A realistic worker’s compensation plan should also be re-negotiated. It should be made clear that resolutions from the meetings will be binding on all.
“The forum can also suggest long term measures that could be undertaken to improve the living standards of mining workers – for instance, large-scale construction investment of decent accommodation, health and social amenities, including schools, to be offered at subsidized rates for mining workers and their families.
“Here is an example of where public-private partnerships between mining companies and the South African government can make meaningful changes in the lives of ordinary South Africans.
“Obviously, by exposing the deep contention between workers and corporate entities in South Africa, the Marikana events would no doubt revisit the debate on nationalization, and with that comes a higher risk outlook and a lower credit rating for the South African economy.”
“Major rating agencies have cautioned time again about the social consequences of having an unemployment rate hovering around 25%. In South Africa, official estimates indicate that just over 71% of those unemployed are black, women and between 17 and 34 years of age.
“In a global downturn such as this one, unemployment will affect those with the least skill relatively more, such has happened in the mining industry, a sector which, although small in size – it contributes some 10% to GDP – has much wider multiplier benefits; not only because it is interwoven with the banking industry, but also because it provides regional employment within the Southern African Development Community, a constellation of 15 countries.
“South Africa’s coveted investment-grade sovereign ratings have been put somewhat at risk by social instability in the mining industry. It is a sober reminder that politics lead economics, and that while the global economy can take some of the blame for social unrest, the inertia in economic policy is equally to blame for the tragedy that occurred at Marikana, an area rich in platinum deposits.
“Investors have often criticized economic policy for having a core weakness – inflexible labour legislation. While a drastic overhaul of these regulations may be needed, no change is likely to happen any time soon, not with the Congress of South African Trade Unions, the largest organized labour body, being part of South Africa’s governing tripartite alliance.”