<<It's that slave labor (over half of costs) that's is the key to their success. Their formula: give the mining unions a 10% wage increase in Rand terms. Then laugh all the way to the bank when the Rand declines 30%, wiping out workers real income in a heart beat and more.>>
excuse me? you can't equate changes in the Rand's external value to those in its internal value. comparisons of SA wages with those in the rest of the world based on the exchange rate are utterly meaningless. you'd have to look at purchasing power parity. when i emigrated to SA and told my friends what i was earning, they were incredulous. however, my Rand earnings bought about three to four times MORE in terms of goods and services in South Africa than they would have overseas. for instance, a packet of cigarettes costs about 3 Rand, or 27 US cents. food generally costs about 10% of what it costs in industrialized countries. the same goes for rent and electricity.
the wages of the SA miners are certainly not generous, but compare very well with the SA average. besides, in a country that has between 40 to 50% unemployment, you can't just raise wages willy nilly, as the last thing you want to do is destroy the country's competitive advantages.
in short, all your fretting about 'slave wages' is based on a fallacious assumption, namely that the exchange rate says something about the real value of those wages. note by the way that the Rand is under pressure mainly because it is used as a hedge for emerging market currency risk in general, as no other emerging market has such a sophisticated and liquid currency trading system in place. it has really not much to do with perceptions about the SA economy, or inflation differentials. inflation in South Africa is at its lowest level in 20 years. |
