South African gold miners are demanding better pay – and they're striking to prove it. A National Union of Mineworkers (NUM) press release titled "Gold companies to face the music tonight," announced the scheduled strike, along with pay raise demands of up to 150% for entry-level workers.
"[G]iven the arrogance of the captains of the gold mining industry, the union is forced to embark on nationwide industrial action that will change the gold mining landscape forever," noted NUM spokesman Lesiba Seshoka in a statement today. While Goldfields' CEO got a specific shout-out for his A$4.8 million bonus last year, the "captains of the gold industry" are all under attack.
According to ABC, the overall gold sector could lose around $34 million of production for every strike day – and miners have threatened to shirk work until Christmas if demands aren't met. That could mean stormy forecasts for the likes of Newcrest Mining (ASX: NCM), Kingsgate Consolidated (ASX: KCM), Silver Lake Resources (ASX: SLR), and Medusa Mining (ASX: MML).
Foolish takeaway
South Africa is no stranger to strikes, and this latest move is hardly news for the gold sector. But with gold prices taking a dip from all-time highs, mining companies might be more hesitant than ever to put themselves in a tighter financial spot than they already are.
Strikes are expensive and inefficient, but, as the NUM and gold corporations have proved once again, altogether necessary. For investors, workers, and corporate management alike, a quick resolution is the best solution. That involves opening up communication lines, finding middle ground (and there is plenty between the 6.5% offered raise and NUM's 150% demand), and acting on a decision that'll put everyone in a position for stable profits in the years to come. If not, it might be time for long-term investors to look beyond the allure of resources and consider sectors where living wage issues are worlds away.
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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.
