South African unions representing gold miners said Wednesday wage negotiations have reached a standstill and that a legal strike is imminent, after they rejected offers from seven companies.

Gold producers represented by the Chamber of Mines of South Africa (CMSA) proposed wage hike of 5%, up from the 4% previously offered.

The National Union of Mineworkers (NUM) general secretary, Frans Baleni, said the 1% increase offered was an insult to workers and proceed to declare a deadlock in the negotiations.

The dispute is now going to arbitration, Bloomberg reported, as the sector proposal does not come close to meeting union demands, which include pay increases of more than double.

The more-established NUM is asking for a 60% increase from the minimum entry-level salary for gold miners, while the Association of Mineworkers and Construction Union (AMCU) — South Africa’s fastest-growing mining labour coalition — seeks more than a two-fold rise.

“The effect of this offer would be to raise the guaranteed pay of entry-level underground employees for major gold-producing companies to at least US$980 per month,” the CMSA said in an e-mailed statement.

Analysts agree the outcome of the upcoming arbitration may push gold producers to leave South Africa or simply close down all operations, as costs continue to escalate.

Earlier this month, the chamber’s chief executive officer, Bheki Sibiya, said a wage negotiation failure would likely destroy South Africa’s largest export industry and the nation’s credit rating.

“Neither the industry nor the country can afford yet another wave of calamitous workplace disorder that delivers additional global uncertainty and becomes the cause of further downgrades of South Africa’s sovereign credit rating,” Sibiya wrote.

South Africa’s two main mining sectors, platinum and gold, are under pressure from spiralling costs and weaker commodity prices. Their representatives have warned than any significant increase in wages will risk more job losses and trigger closures.

via Wage talks in South Africa’s gold sector reach standstill: strike imminent | MINING.com.