UPDATE 2-S.Africa union, Amplats seal two-year wage deal

Wed Aug 31, 2011 12:04pm EDT

Related Topics

* Amplats 2011 output target is 2.6 mln oz

* Wage increases agreed of 8 to 10 percent

* Wage deals have typically exceeded inflation (Recasts with background, latest share price)

By Ed Stoddard

JOHANNESBURG, Aug 31 (Reuters) - South Africa's National Union of Mineworkers said it had agreed on a two-year wage deal with Anglo American Platinum , the world's top platinum producer which accounts for about 40 percent of global supply.

Amplats shares closed over 2.5 percent higher on the day as investors were relieved that strikes would not threaten a 2011 platinum output target of 2.6 million ounces, while the agreed wage hikes came as no surprise.

The union (NUM) said on Wednesday that Amplats had agreed to raise wages by between 8 and 10 percent, depending on worker category. The union's demands had started at 20 percent -- around four times the inflation rate -- before coming down.

"Members of the NUM at Amplats have overwhelmingly accepted a wage offer ... We are happy for our members," NUM said in a statement on Wednesday.

The deal was a rare piece of good news on the labour front as South Africa's annual "strike season" winds down.

A strike against the country's main gold producers in late July and early August cost about $190 million in lost output, while a week-long coal strike curbed exports to resource hungry India and China.

Those settlements were for the most part in the same range -- 7.5 to 10 percent -- well above the inflation rate of 5.3 percent, which has become standard practice but one that companies say is not sustainable in the long run.

But the official inflation rate does not tell the whole story for many miners, who are low-income or mid-income workers with many dependents and spend much of their take-home pay on food and fuel, the costs of which are rapidly rising.

On the other hand, economists warn that wages in Africa's largest economy are generally higher than those found in its main emerging market rivals, while its workforce is less productive. This double whammy is likely to deter investors who are already unnerved by talk of nationalisation.

Attention will now turn to ongoing talks with other platinum producers including Impala Platinum , the world's second-largest producer of the metal used for making the catalytic converters that halt emissions from cars.

Negotiations with Northam Platinum and Lonmin are expected to resume in September.

NUM also said on Wednesday its members at utility Eskom, which generates virtually all of South Africa's power, would strike if it went through with what the union said was a "unilateral" attempt to impose a 7 percent wage hike.

It said it had "adopted a programme of action that includes lunch-hour pickets and marches ... which will culminate in a strike action against Eskom."

Eskom officials could not immediately be reached for comment. Eskom has said in the past that its workers cannot strike because it provides an essential service. Other unions are also currently in wage talks with it.

(Additional reporting by Olivia Kumwenda, editing by Jane Baird)

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