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Thursday, 3 December 2009

Mining Reflections: Proposition Three

Proposition 3: The plight of our mining workers is deplorable
Proposition One acknowledged that Zambia as a whole has seen little benefit from its vast mineral wealth. Proposition Two demonstrated that the picture looks worse when we focus on mining communities. We learnt that the overall impact on these mining towns is effectively negative given the huge uncompensated environmental and infrastructural carnage that foreign mining companies are wreaking in our nation. Under proposition three, we close the circle of impacts by focusing on the deplorable plight of our mining workers. But prior to that we must first deal with the 'why does it matter' question. Invariably, when talk of the poor deal that mining workers have been handed rears up, someone always contends that "it's better than nothing". Mining companies are creating jobs which these miners would never have had. Proposition Two briefly challenged that assertion. Here the focus is why we should care about how mining companies treat workers for moral, social and economic reasons.

Human beings are endowed with moral worth as bestowed on us by the Creator. It is this "bestowed worth" that causes each of us to care about how others are treated whether those individuals are being paid to do that vocation or not. We care that in that job they are treated right by their employer. We can extend this argument in two ways. First, the government has through legislation bestowed rights and responsibilities for both mining employers and employees. When investors violate these responsibilities through negligence, as citizens we expect the government to take corrective action. Secondly, the current plight of mining workers may well be the fault of the Zambian government and by extension the Zambian people who put the government there. The bungled privatisation process of the 1990s left many of our workers impoverished and without protection before new investors.

In recent years of course the mining companies treatment of its workers has brought significant damage to our international reputation. Zambia has often been cast as a country exploited by foreign investors and its people as either extremely ignorant of how to secure a win-win situation or exploited by those in power in collusion with mining investors. Like most extremes the truth probably lies in between somewhere, but in the modern age of the Internet and fast spreading information, such damage to our reputation are hard to rebuild. There's no long term advantage in being cast as a nation that bows its knees to any new investor at the expense of its people.

The other dimension is social cohesion. Where workers are being treated poorly, it wont be long before strikes and demonstrations occur. People start feeling prisoners in their own country and begin to agitate for change. Economic arrangements that do not enforce social stability often leads to social implosion. For this reason even if we don't care about mining workers per se, we should recognise that how they relate to their employers is just as our business, as much as its theirs. More specifically, social unrest raises the spectre of costs associated with keeping a lid on such things when it all comes to the boil. Such costs are usually borne by our justice system (police, courts, etc). There are other economic costs associated with the poor plight of mining workers. These include health costs, wider negative impacts of social break down, political instability, etc. All of these costs are usually borne by ordinary Zambians.

Given the aforementioned reasons, it's imperative to ensure that workers have a prosperous, safe and secure working environment. Their problem is ultimately our problem. Unfortunately this is not the case, many politicians, and sadly ordinary Zambians, ignore the abuse of our mining workers. A number of issues lends credence to this troubling conclusion.

The poor safety practice of mining companies. Thomas Mumba loved to sing in the church choir and dreamt of recording a CD of gospel music. At 23 he did not drink or smoke. He preferred to spend his time worshipping God. Thomas was also the only bread winner in his family. Today Thomas lies buried along 45 workmates following a blast at a subsidiary mine in Chambishi three years ago. His mother Justina Mumba best reflects the sentiments of many : "They came to make profit, not to look after the lives of the people who were giving them profit". The Chambishi incident brought to the surface what everyone knew. The safety records our new masters is extremely appalling, especially for Chinese firms.

A large contributor to the poor safety environment is casualisation - the situation in a which a dual labour market develops : a core of permanent workers with a periphery of workers on fixed - term contracts, or contracted as self-employed individuals. Casualisation diminishes safety in two ways. First, it provides the employer the incentive to undertake dangerous and reckless mining activities because the contracted labour is not fully tied to the mining company. The expected cost to the employer when something goes wrong is therefore diminished. With a large pool of unemployed labour in Zambia, casualisation has found a natural home in mining companies. Secondly, casual labour by its nature is less tied to the firm and therefore has minimal incentive to undertake mining activities that are safe for all employees in the long term. The most common accident in the mines is "rock fall". These usually happens by casual labourers going mad developing [digging new seams] and leaving people exposed without support in roof sheets. Most of the development work in mining is done by casual labourers.

Casualisation of course has another impact on mining employees - it has led to poor wages. This has occurred through two complementary routes. The opportunity to have casual workers has provided an incentive to mining companies to get rid of contracted workers and hire casual employees. This has often led to reduction in contracted workers and reduced their bargaining power. Mining union power is being eroded as casualisation amplifies - the wages of contracted workers have therefore remained stagnant. The other impact is that casualisation has reduced the opportunities for long term contracted work. With this in mind we can confidently assert that the quality of employment from additional mining investment is generally poor.

Causal workers have no long term pension benefits to speak of. This is clearly a concern because as we have noted many of these casual workers tend to be ex-miners. Without long term pension security there's no transfer of wealth across generations and many people become again dependent on the state. The modern day mining worker is a casual worker living and working for today to support his family, but no security for tomorrow.

Finally, there's the question of labour rights. This is particularly pertinent for many employees of Chinese mining companies who are known to have been denied union rights. Their conditions are probably worse than for those working for Canadian, Swiss or South African multinationals.

These issues taken together present a potent challenge to the likes of President Banda who speak joyously of the benefits of reducing mining taxation in exchange for new jobs. We are surely in order to ask - of what quality? Our mining workers can now be added to the list of losers from the current mining policy, alongside mining communities and the country as a whole. The question then is, who is benefiting?

Next stop - Proposition Four.

Other posts in this series :

Mining Reflections : A People Betrayed
Mining Reflections : Proposition One
Mining Reflections : Proposition Two

Update (3/12/09):

ZANIS reports the Nkanddabwe Chinese Collum Coal Mine (CCM) Workers have gone on strike demanding for improved condition of service and improving safety at the mine in Sinazongwe district in Southern Province. According to the Ward Councillor Partson Manguje and the CCM Director Xu Zian Rui the workers blocked the road leading to the mine and threw missiles at the Chinese managers. The workers are apparently getting a salaries in the range of K200, 000 - K500, 000 per month. A situation the Councillor describes as getting "slave wages [which ] have incensed the workers who were unable to feed their families from the meager salaries".


Update (6/12/09)

The PF President Michael Sata touches on the poor deal of mining workers.

10 comments:

  1. I like when you say :
    " The question then is, who is benefiting?"

    i asked the same question to the GRZ several times but i never received answer from them.

    I can't understand why the GRZ cut mining taxes ?

    I can't understand why ZCCM-IH received only 3 M US$ dividends while in the same time the mines earn more than 3 Billions of US $

    I can't understand why the GRZ is silence and don't want to talk about this problem, this biggest problem in zambia

    I can't understand why the boss of First Quantum minerals said that The GRZ never asked them to give more dividend to ZCCM-IH

    I can understand only one thing : some people earn a lot of money for this situation, and for that the people of zambia never know this situation

    Zambia will not get up if this comportment stay in place

    I regret levy Mwanawasa who started to clean up the country

    lose severals hundred millions of US $ per year is criminal, even when you know that in zambia a lot of people can't eat every day

    ReplyDelete
  2. the people of zambia have to ask explanation to the GRZ

    this situation is not normal

    incompetence, corruption, what is the answer?

    ReplyDelete
  3. Mining and other wages will rise after the supply of labor is absorbed by the demand for it. That is why there needs to be increased investment first, creating new jobs that will absorb the supply of labor and which will then eventually start bidding up wages. It is usually a long term process.

    ReplyDelete
  4. Mining and other wages will rise after the supply of labor is absorbed by the demand for it.

    That would be around the time when 58,000 mine workers has expanded to the 4,000,000 people not in formal employment?

    Usually? Can you show me the example of one economy where this model worked?

    ReplyDelete
  5. China is an example where wages have risen after the supply of labor has been absorbed by the demand for it from an expanding economy:

    http://www.businessweek.com/magazine/content/06_13/b3977049.htm

    ReplyDelete
  6. I'm ok with this but when you know that KANSANSHI Mining have a benefit more than 2.1 billion of US$ since 2005 you can't explain why ZCCM-IH receive only 3 Millions of US$ while zccm-ih have 20 % stake in this mine !

    First Quantum minerals is not a partner but a vulture

    why GRZ and zambians media never talk about it ?

    a lot of questions but the more important is : who is benefiting? !

    ReplyDelete
  7. The End of Poverty? New HD Trailer

    The main theme for this documentary is: poverty is not an accident.

    From the description on Youtube:

    East Cinema) and November 25th in LA (Laemmle Sunset 5)
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    The feature-length documentary The End of Poverty? won critical acclaim at the 2008 Cannes Film Festival and is narrated by actor Martin Sheen. It is a daring, thought-provoking and very timely documentary by filmmaker Philippe Diaz. The film takes a hard look at world poverty and challenges capitalism and the American way. In a world of plenty, why are so many families around the planet still living in abject poverty? Looking beyond the popular "solutions" for poverty, The End of Poverty? asks if the true causes of poverty today stem from a deliberate orchestration of resource misallocation started in colonial times.

    ReplyDelete
  8. the game continue, but who receive money ?

    miners receive only 200 US$ per month !

    zccm-ih receive no dividends because GRZ doesn't want


    who receive money for these arrangments ?


    Zambia plans no mining tax rises: trade minister
    Thu Dec 3, 2009 3:01pm GMT


    By Carolyn Cohn and Joe Brock

    LONDON (Reuters) - Zambia plans no tax rises for mining companies in 2010, and the country is expecting an increase in foreign direct investment to $2 billion next year, Zambia' trade minister said on Thursday.

    The International Monetary Fund and World Bank have said Zambia should increase its mining taxes and should not have abolished a 25 percent mineral windfall tax this year.

    "You cannot just be playing around with taxation -- one year you do this, another year you do that," Felix Mutati told Reuters in an interview on the sidelines of a Zambia investment forum.

    "Our focus will not be new taxes for the mining sector, let's encourage investment...there (will be) no tax increases in the mining sector".


    http://af.reuters.com/article/investingNews/idAFJOE5B20LB20091203

    ReplyDelete
  9. Are all mine owners equally bad? Are all miners getting a raw deal?Should we continue to bunch together all MINES (read "Copper mines owned by foreigners) all INVRESTORS/FOREIGNERS(read "whites, Indians, Chinese"), all MINE OWNERS(read ditto above), all COMMERCIAL FARMERS(read "whites") and all MINERS (read "indigneous Zambian")? What about Zambian mine owners employing Zambians in dangerous pits in the middle of nowhere, with no access to any services, with no safety standards and meagre wages at best? Are all miners in copper mines in Zambia treated appallingly and paid badly and subjected to poor conditions - or are some mines operated safely with rather good pay and conditions for their miners - considering what a teacher or bank teller is paid? Are all white commercial farmers foreigners and investors, newly arived? Do they all treat their staff badly and pay them nothing? How do "black" Zambian farmers treat their workers? What about Somali or Senagalese emerald and aquamarine mine owners - are they fair, genrerous, safety-conscious employers? What do they contribute tot he economy in terms of tax revenues? Let's make the debate meaningful by being unbiased and academic and forgetting old scores - let's put the people of Zambia before foreigner-bashing for a change.

    ReplyDelete
  10. suesee,

    First you need to earn the right to be that defensive.

    With the mines making sweetheart deals behind closed doors and shifting the ENTIRE tax burdon onto the Zambian workers, I'm not exactly in the mood to start searching out the FEW Zambian owned mines, just to pretend to be 'evenhanded'.

    The truth is that the major mines in Zambia are now foreign owned. This complicates dealing with them, because all of a sudden the mine owners have recourse to protection by foreign governments.

    Some even pretended that contracts signed between private western corporations and the Zambian governmetn were on a par with international treaties!

    The truth is that because of collusion between the foreign mines and the corrupt MMD government, the Zambian taxpayer and economy is missing out on $2.5 billion a year in expatriated taxes.

    This would not be the case if they were still state owned.

    ReplyDelete

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