It is a myth to refer to a ‘Paterson Plan’ or ‘Paterson System’.   Dr TT Paterson was a scientist who became interested in organisational management and the structure of organisations.  He wrote a number of books and consulted widely, even in South Africa in the early 70s.   His last book was published in 1981 – “Pay: For Making Decisions”.   To the best of my knowledge he never advocated any specific plan or system as such.   This has not stopped adherents of his approach and methods from using his name to propagate their own ‘systems’ or ‘plans’ based on the thinking of Dr Paterson.

A good example is the statutory form EEA 9 dealing with ‘equivalent occupational levels’ with a semantic scale and a few ‘measuring devices’ such as Paterson, Peromnes, Hay and Castellion.

Read more about Dr Thomas Thomson Paterson (1909 – 1994) by clicking on the link.

It has been suggested that seven and not six occupational levels should be used – Understanding occupational and job levels (South Africa already has world-class legal frameworks and requirements to ensure proportionate income differentials and ensure ‘equal pay for work of equal value’.   The only shortfall is to adopt 7 instead of  6 occupational levels in EE9.   There should then be 21 job grades (three per occupational level) with proportional differentials).

Carol Paton’s article Mining’s real issues need to see light of day was first published in Business Day on 15 October and courtesy of  Business Day here are some random extracts dealing specifically with the arguments concerning the fairness of the wage structure on the mines.

In fact, the strikes have been the catalyst for the real talking to begin.

The Chamber of Mines and the National Union of Mineworkers (NUM) both want a commission of inquiry into working and living conditions in the industry.   The commission or investigation — if it is to make a difference — will have the job of questioning institutions and practices that before the Marikana massacre seemed unquestionable.

Three areas in particular stand out:

    • the fairness of the wage structure on the mines;
    • migrant labour and living conditions; and the
    • industry productivity gains needed to afford a fairer deal for workers.

There will be other areas too: the role of mining companies in community and social development; the failure of the government as a partner in building sustainable mining communities; and what to do in general about problems of development.

But it is the assumptions that underlie operations in the industry — many of them due to its history — that really need to come under the spotlight.

For unions, top of the list is the fairness of wages.   The popular demand during the strikes for a basic wage of R12,500 has highlighted this question.

The Chamber of Mines points to the fact that while mineworkers used to be among the lowest paid of workers, now they are among the highest paid, excluding the public sector.   Since 1994, wages in the sector have risen in real terms by 2.8%, it says.

The Labour Research Service, which surveys annual wage agreements and provides advice to trade unions, says that this year the median minimum wage across all bargaining councils and sectoral determinations was just more than R3,000 a month.   In mining this year, says the service, the average minimum wage was R4,300.

Wages are better in the platinum than they are in the gold sector.   Following recent strikes, entry-level underground platinum workers earn a basic wage upwards of R5,500; while gold entry-level wages have, at most companies, not quite hit the R5,000 mark yet.   Rock-drill operators — the best paid among machine operators — get more.

In platinum the basic wage is upwards of R6,600 while wage levels for gold rock drillers are about R5,900.

None of these figures includes benefits or bonuses, which when production is on target can be about 30% of the cash wage.   One gold producer says the average bonus for a rock driller is R1,700 a month.

The response of employers to higher wage demands has always been to cite affordability concerns, because of the depth of South African mines, the low-ore grades in the case of gold, and the labour intensitivity of production.   Yet, on the other hand, mining companies have had many years with very large profits.

One of the NUM’s arguments around fairness relates to the way the job-grading system fails to reward the physical toughness of underground mining.   The Paterson system evaluates jobs on their level of authority.

But, says NUM head of collective bargaining Eddie Majadibodi, that is not the only way of looking at things.   Environmental issues, like the physical effort and the hazardous nature of mining, should be configured into the way employees are rewarded.

Mr Hartford says the Paterson system is flawed because it does not take into account who adds what amount of value to the production process.  If mining jobs were evaluated in this way, then rock-drill operators whose job it is to remove rock from the face would be rewarded very differently.  “Mining is about how much rock you blast.   Without blasting and without drilling rocks, you don’t have a mine; you just have a dream,” he says.

International comparisons show this up starkly.  A recent article in the Wall Street Journal, about how high-school dropouts are coining it as rock drill operators in remote parts of Australia, says a driller can make $200,000 a year.   While Australian mines are heavily mechanised and cannot be easily compared to those in SA, the differential is ludicrous.

Mining analysts say opportunities for wage increases of the scope being demanded are limited given the present cost structures of South African mines.

But, some point out, the opportunities for efficiency improvements are tremendous as efficiencies in South African mines are “very, very low”.

While mining companies do not readily make available statistics on rock face advance per day — the fundamental measure of daily or weekly productivity in the real workplace — anecdotal evidence is that this has dropped off dramatically in recent years.

One analyst says he believes that face advance on most mines is only a third of what it could be each day, if all the required holes were drilled and blasted and the necessary logistical support available to allow maximum productivity.   “In this way, there is huge scope for increases in wages if it can go hand-in-hand with productivity improvements,” he says.

Mr Hartford believes an agreement on a 365-day-a-year operation is one of the things that workers and trade unions need to bring to the party.

“Mines have very high fixed costs: water, power and so on.   There is a lot of duplication and wastage.   We need to create an industry with a lower cost structure.   Wages can’t be dealt with in isolation of cost structure.”

The unaffordability of higher wages should also be dealt with in the context of profit-sharing.   While windfall profits have recently become a focus of attention by the African National Congress, which hopes to maximise resource rents through a supertax on profits of more than about 14%, this should perhaps shift to workers sharing the benefits when times are good.

Says Mr Hartford: “It’s a feast or famine industry.  There are times when things are very hard and for long periods mines can be unprofitable.  But there are also massive windfalls and employees should share in that.”