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Bench Marks Foundation slams 'inaccurate reporting' by platinum firms

15th October 2013

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – Platinum firms do not accurately report labour data, the Bench Marks Foundation said in its latest research report.

The foundation’s Policy Gap 7 report, released on Tuesday, extensively reviewed the platinum sector over the past 12 years, as well as a ten-year review of Lonmin’s Sustainability Development Reports to society.

Bench Marks Foundation executive director John Capel said that, although obliged by law to report accurately about their employee numbers and wages, the results revealed that most of the companies did not.

The research report, which focused on corporate social responsibility and mining, with particular attention to Lonmin's reporting, aimed to highlight how one of the “better” companies performed when it came to sustainable development.

The report stated that Lonmin had argued that it acts in a more socially and environmentally responsible manner than other mining companies.

“Lonmin fails to live up to its own sustainability goals. If it is true that it performs better or much better than most of its mining company peers, which we have no reason to question, its failure indicates that South African mining, in general, is not sustainable. What does this mean?” the researchers asked.

Capel noted that, the bigger the company, the less accurate their contract labour data was, particularly the reported wage bill.

Further, he said that the majority of the wage levels for contractors were “guesstimates made either by staff or by the companies themselves”, while the hundreds of subcontractor firms further distorted possible numbers.

The organisation said “books were not in order” with regards to contract labour and labour broking, forcing Bench Marks to approximate wage levels from tables on employment and total labour costs, which were also not accurate.

But the foundation pieced together that about 30% of the workforce in platinum mines was contract labour – usually used to lower the cost to the company's shareholders, as contract workers, on average, earn 60% of what permanent workers earn – compared with the reported 10% to 15% in the gold mining sector.

“While investigating Lonmin, we discovered that since 2002, 20% to 25% of the company's workforce has been contract workers and the proportion grew to over 30% in response to the 2008/9 global economic crisis,” said Capel.

This compared with Anglo American Platinum’s (Amplats’) response of mass retrenchments, he said.

The decline in total labour force between 2008 and 2009 at Lonmin reached only 1 605 workers, after taking into account the growing use of contract workers, while Amplats, since 2008, went from a workforce of 88 300 to 51 000 by 2012, with the company having retrenched all types of employment contracts, with the majority coming from contract labour.

The proportion of contract workers in the total workforce of Amplats had consistently fallen, from almost half in 2006 and 2007, to 8% in 2012, but contract labour remained, since 2002, between one-quarter and one-fifth of Lonmin’s workforce.

Many contract workers undertake the same work as permanent workers, such as rock drilling, but they do not get the same benefits that permanent employees get or the same kind of employment protection, he pointed out.

The use of “extremely low paid” contract workers in regular production must be abandoned by the industry.

“Looking through Lonmin's reports, the calculations based on total employment and total labour cost per year, which are rough estimates provided by the company, give an erratic curve, but indicate successful cuts in average pay increases per Lonmin employee between 2009 and 2011, probably as a result of their contract worker strategy,” he stated.

Capel said that wages, which were a critical sustainability issue, were not reported in companies’ sustainable development reports, as was common in the Northern hemisphere.

"The lack of accurate reporting is a problem that needs to be sorted out quickly,” he said, adding: “The Department of Mineral Resources must enforce accurate reporting on the employment of contract workers in the industry by putting in place a well-resourced monitoring and auditing system and punishing inaccurate reporting,” he concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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