BUSINESS MAVERICK ANALYSIS: Lesson from Marikana: The other side of above-inflation pay rises

Platinum wage talks are upon us again and the Association of Mineworkers and Construction Union is in fighting mode, with demands for raises of up to 50%. One of the factors often cited to explain this militancy is worker debt and the garnishee orders that are enforced for compliance, which can see much of a miner’s monthly pay diverted to creditors.

One of the items that catches the eye is the pay raises that were agreed upon in the decade before the mayhem. Off a very low base, from 2003 to 2011, Lonmin’s rock-drill operators – who became AMCU’s core support base – received above-inflation wage increases every single year, which often meant double-digit hikes. Some years the gap was not big – in 2007, their pay rise was 10%, while average CPI inflation that year was 9%. But in 2008, when CPI averaged 9.5%, they got an 18.

What appears to have been unfolding – and this, admittedly, is a hunch – is that successive wage growth that accelerated beyond inflation provided many of these miners with, probably for the first time in their lives, a measure of discretionary or disposable income. For decades, South Africa’s mostly migrant mine labour force had been paid wages that only provided for a subsistence existence, a basic supplement to the subsistence farming carried on by their families back in the rural homelands.

This may have created a vicious cycle – wage growth that enabled workers to finally buy stuff, which in turn pushed them into crushing levels of debt, which in turn spurred their demand for even higher increases. Rising living standards can come at a price, especially for a workforce that finds this new world of predatory finance and credit difficult to navigate.

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