Over the past year, South Africa, a country that depends heavily on mining for its economic welfare, has seen serious cracks start to develop the security of its mining industry. Today, South Africa is becoming a battleground not only between labor and capital, but also the state and mining firms.
Mining labor relations in South Africa have been tense to say the least over the past year, with many strikes even labor related violence. In one such incident, 34 platinum miners were killed by police while on strike. Beyond that, there is plenty of unrest over miners' pay, which is further complicated by dropping commodity prices. In many ways, South African miners can be seen as the victims of trade as they find it difficult to secure adequate wages or losing their jobs as mines close. This is somewhat reflective of the problem of factor mobility within the factor and sector models. Although the factor model may predict that it would be somewhat easy for the laid off miners to find work in other industries, it is more difficult than that model seems to suggest and may be more indicative of the problems highlighted in the sector model. Similarly to in America, there have also been mentions of helping South African miners find new jobs through new training, such as is highlighted in this video, which also mentions the problems with mining and labor in recent times, as well as the influence on other industries that mining has.
South African economic development has also proved challenging because of dwindling investment due to the labor unrest as the South African government fights to keep the mining industry from moving to other African countries. The recent labor unrest made it so that "Many investors are still nervous about last year's strikes at many of South Africa's mines and the devastating effect they had on production." South Africa is much more developed than most African nations; however, their economy could be endangered if much of the mining industry chooses to relocate to other countries. One comparative advantage that South Africa does have other the over countries that may attract mining is its more developed infrastructure.
Whatever the future of South Africa's mining industry is, it speaks volumes about factor mobility within the region, the ability of firms to relocate in order to maintain advantages, the necessity of investment in South Africa's economy to keep it afloat, and the potential for other African countries to benefit through foreign investment in mining.
This seems to be extremely telling of the problem of economic diversification in less developed countries. Granted, South Africa is considered more of a middle-income country than a "less developed" country, but compared to the United States and Western Europe, it puts all of its eggs in one "exporting basket." I think that this mining crisis is symbolic of the greater problem of countries at a trade disadvantage having to rely almost wholly on exporting raw materials. The idea of fixing this problem could be to diversify South Africa's economy, but obviously, this is easier said than done.
ReplyDeleteThis is a clear example of economies that are heavily reliant on natural resources for income. South Africa seems to be the exception, as its economy is growing while we can observe other natural resource economies remaining stagnant. I like that you brought up the difficulties in the diversion of resources to certain sectors, as we can observe a clear winner-loser dichotomy in this example.
ReplyDeleteFor South Africa, a country whose mining industry employees a lot of its citizens, must find a way to strike a balance in the needs of both labor in capital. South Africa is a developed enough country to know the stipulations of an export- oriented economy and must find a way to provide fair wages to its workers in order to maintain its clout in mining exports.
ReplyDelete