Strike over wages in S.Africa gold sector looms

By James Macharia

JOHANNESBURG (Reuters) - The head of South Africa's biggest mineworkers union said on Thursday its members were prepared to down tools in a bid to win a wage raise, but hoped for a deal to avert a strike.

"So far what we have been offered by employers is below inflation, we are still engaging them, but a strike will come if we see employers are not being reasonable," the National Union of Mineworkers (NUM) President Senzeni Zokwana told Reuters.

Unions and gold producers started meeting with a mediator this week to find common ground after workers demanded a 15 percent pay rise -- well above inflation of 8.4 percent year on year in April -- which gold companies say they cannot afford.

The mediator was called in after unions rejected an improved offer of 7 percent from gold producers, and warned of a strike.

"A seven percent wage increase is too low especially for lower earners," Zokwana, who was last month re-elected for another three year term at the helm of the NUM said.

"Despite the global economic crisis, the gold sector is still making money. Look at the price of gold."

Driven by investor interest, gold has defied the global economic decline, its price hit $1,005.40 on February 20, the highest since a record peak of $1,030.80 in March 2008. It stood at around $938 an ounce on Thursday.

Zokwana said "a deal could still be made" after Wednesday's first meeting with the Commission for Conciliation, Mediation and Arbitration (CCMA), which set out rules of engagement between the parties. Another meeting would be held in two weeks.