UPDATE 2-Zambia warns miners to consult government on job cuts

Wed Nov 13, 2013 9:38am EST

* Lusaka has been taking nationalist posture

* Message: you need our permission to cut jobs

By Chris Mfula

LUSAKA, Nov 13 (Reuters) - Zambia, Africa's top copper producer, warned mining companies that any moves to lay off workers without consulting the government would be seen as a violation of their investment licences.

President Michael Sata, a populist who swept to power two years ago on an activist platform to defend workers' rights, has been taking a hard line with miners and other foreign companies that have tried to lay off workers.

"It has been observed that some investors in some mining companies have found it necessary to downsize their workforce each time they are faced with operational challenges," the government said in a statement on Wednesday.

"Government views such actions as a violation of, and not within the spirit of the investment licence."

The government added that it was "unwarranted, unfortunate and unacceptable" for mining companies to cut jobs before consulting the government and other stakeholders.

This week Zambia revoked the work permit of the chief executive of Konkola Copper Mines, its biggest private sector employer owned by Vedanta Resources, as the latest move in a dispute over its plan to cut hundreds of jobs.

Sata's government also last month threatened to shut Shoprite stores after the South African company fired workers who went on strike over pay. Shoprite, Africa's biggest retailer, subsequently backtracked on the sackings.

FROM CONFUSION TO CLARITY

"You now have to go to the government to get approval for firing workers. This clarifies that the cost of doing business in Zambia, especially as it relates to labour, is higher than people thought in the past," Chris Becker, Africa market strategist at ETM Analytics, said.

"They are trying to stake their position on this, and at least it is giving some clarity now and we know what to expect, because there has been so much confusion the last few weeks, starting with Shoprite," he said.

Zambia is not alone when it comes to state or political intervention to protect jobs in a region where unemployment levels are high and subsistence farmers make up much of the workforce, putting a high social premium on a regular wage.

Senior officials with South Africa's ruling African National Congress threatened the licences of Anglo American Platinum earlier this year over its plan to cut up to 14,000 jobs as it tries to restore profits.

They also expressed anger at Amplats' alleged lack of consultation over the proposed layoffs. Amplats, a unit of Anglo American, has since pulled back its target under intense government and union pressure.

Elsewhere in Africa such as in neighbouring Zimbabwe, government barbs are often aimed at investors from the west or South Africa, while pointedly sparing those from China, in part because of Beijing's policy of offering aid, soft loans and investment with no strings attached.

In Zambia, however, Sata's nationalist posture has in the past also targeted Chinese investors, whom he has accused of ill-treating Zambian workers or of not providing enough jobs to locals.

Mining companies in Zambia include First Quantum Mineral , Glencore International, Vale and China's Jinchuan.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.