South Africa's biggest union on Monday asked for wage increases for its members in the gold and coal sectors that are nearly double the national inflation rate, setting the stage for tough talks next month.
The National Union of Mineworkers (NUM), which represents some 190,000 workers in the two sectors wants a 15 percent wage increase from the companies represented by the Chamber of Mines, and would not take anything less, it said in a statement.
South Africa's inflation stood at 8.6 percent in February.
The NUM said it wanted to shield its members' earnings from inflation and still ensure they keep their jobs in a sector hit by job losses in the wake of the global economic turmoil.
Wage hikes are likely to boost production costs, already about half of total costs for gold producers, who sell for dollars and pay costs in the local currency.
The union said the coal and gold producers could afford with ease to give the increase. South Africa's coal producers include mining group Anglo American Plc and rival Xstrata, while AngloGold Ashanti and Gold Fields, the world's number three and four producers are the major gold mining fimrs.
A wage deal will take effect in July 2009 for two years.
This is just the start, the opening salvo, said Nick Goodwin, a Johannesburg-based metals analyst at T Sec.
I think after a lot of fighting they could settle at anywhere between 10 and 12 percent. The unions are not worried about the financial crisis, the don't care how difficult the situation may be, they will be focused on helping the workers.
The negotiations could start in the second week of May.
The mandate is clear and our members say they expect no excuses, NUM General Secretary Frans Baleni said.
Elize Strydom, chief negotiator for South Africa's Chamber of Mines, which groups the country's main gold producers, said the union demands of a 15 percent rise as well as increases in various allowances meant the wage talks would be tough.
One shouldn't look only at the 15 percent demand, which is already much higher than inflation. There are other demands the union has made that have a significant implication on costs.
The union also asked for an improved medical cover, and higher allowances for workers living outside company hostels.
These are very big cost items, and very expensive items, we are doing the number crunching right now to see how they will impact overall costs and then give our response, Strydom said.
Strydom said at the last wage talks in 2007, the gold price was about $500 an ounce compared with $871 on Monday.
The 2007 wage talks hit deadlock and required arbitration to reach an agreement, while in 2005, about 100,000 workers went on strike for days in the country's largest gold mining strike in 18 years, costing gold producers about $20 million a day.
They returned to work after receiving an increased offer.
(Reporting by James Macharia)
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