It is probably the worst time for South African gold mining to face more cost increases.
The Chamber of Mines says its members are viewing the potential of increased costs with “trepidation”.
With the industry already in crisis, the current huge wage demands could be the last straw that breaks the camel’s back.
Despite structural difficulty and declining productivity, the chamber says, on its information-packed website, that the gold industry has gone out of its way to maintain employment numbers and to contribute to the economy as a whole.
Central to this is the industry’s ability to manage costs, controlling those over which it has direct say and adjusting to those essentials, such as electrical power, that have to be incurred but over which it has no say.
The gold mining sector has also tried to do its bit on the wages front, paying each gold mine employee an average of R155 037 a year in 2012, or more than R12 500 a month, compared with semi-skilled workers in the construction and manufacturing industries, who earned between R5 000 and R6 000 a month.
Outside of mining, the average South African worker earns somewhere in the region of R3 000 a month.
The top 25% of formal-sector employees earn R7 500 or more a month and the top 10% of formal-sector employees start at a monthly salary of R15 000.
What this adds up to is that rock drill operators, arguably the core of underground miners, fall into the top 25% of formal-sector earners.
On average, only six of every ten have pension provisions, only four of every ten have medical cover and only 7.5 of every ten have unemployment insurance fund cover.
Miners have access to all these noncash benefits.
For the industry to survive and to stem the progressive decline in employee numbers, pay increases must at least be matched by productivity improvements.
In 2012, the sum total of wages paid to gold mine employees was 11 times the amount paid in taxes by the mines.
Inflation, excessive wage demands, electricity and other input costs have combined over the years to put the industry under unreasonable pressure, which has now begun to threaten the very viability of the sector, and therefore its contributions, through taxes and royalties, to government coffers.