July 18, 2018 / 1:29 PM / in a year

UPDATE 2-South Africa gold producers offer single-digit pay hikes to unions

* Gold producers offer single-digit wage hikes

* Offer falls short of union demands

* Industry in a state of steep decline (Adds industry comment)

By Ed Stoddard

JOHANNESBURG, July 18 (Reuters) - South African gold producers said on Tuesday they had offered annual wage increases of up to 6.5 percent to miners and up to 4.5 percent for skilled workers, far short of union demands and confirming a Reuters’ report earlier on Wednesday.

Gold producers have been giving above-inflation wage hikes for years, adding to the cost burden of an industry that has been battling depressed prices, labour unrest and soaring power bills.

Inflation is currently 4.6 percent and food inflation - often a key driver in such talks as the typical South African miner has several dependants - is 3.4 percent. In past years it has been in double digits during such negotiations.

While marginally above inflation for most workers, the offer falls short of the hikes demanded by the four unions involved, which reach over 30 percent in some cases. One union source told Reuters that the gold producers’ offers were “very low”.

The four companies involved are Sibanye-Stillwater, Harmony Gold, AngloGold Ashanti and a smaller producer, Village Main Reef. The group is negotiating under the auspices of the Minerals Council South Africa industry grouping.

“The industry has sought to find a balance between employees’ expectations and preserving the long-term viability and sustainability of the industry,” Motsamai Motlhamme, the industry’s chief negotiator, said in a statement.

The offer is for three years and the annual percent increases will decline slightly over that period.

The four unions are the National Union of Mineworkers (NUM), the Association of Mineworkers and Construction Union (AMCU), Solidarity and UASA.

The NUM wants the basic monthly pay for entry-level underground workers to rise to 10,500 rand ($785) over the next two years, which translates into annual increases of between 15 and 18.5 percent, depending on the company.

AMCU has put in demands of over 30 percent.

In a presentation to the unions on Wednesday, the companies said 75 percent of gold mines in South Africa, once the world’s top gold producer, are currently loss-making or marginal.

The number of jobs in the sector has fallen to almost 118,000 last year from 157,000 in 2010, the presentation showed, while annual production over the same period fell to 138 tonnes from 188 tonnes.

South Africa’s gold mines are the deepest in the world, reaching as far as 4 kms (2-1/2 miles) underground, and margins and grades have shrunk at such depths after over a century mining that has produced a third of the bullion mined in recorded history.

$1 = 13.3340 rand Reporting by Ed Stoddard Editing by James Macharia, Catherine Evans and Jan Harvey

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