Retrenchment of miners could spark regional crisis

Massive retrenchments by South African gold mines as a result of the tumble in international gold prices could spark a regional crisis, analysts told IRIN on Tuesday.

The gold mining industry in South Africa has traditionally been one of the largest employers in southern African, but thousands of jobs are now under threat with the gold price last week hitting a 25-year low.

Last week's liquidation of South Africa's East Rand Propriety Mine(ERPM), one of the oldest mines in the country, saw an estimated 2,500 Mozambican miners retrenched. A further five marginal mines with a workforce of some 12,000 are also under threat.

Around 70,000 Mozambicans are believed to work in South African mines. One analyst told IRIN that it is estimated that one miner on average supports up to 10 people back home.

Apart from the immediate loss of household incomes that layoffs would cause, "struggling economies in the region, simply don't have the capacity to absorb all these unemployed men," the analyst said.

Mozambican labour ministry spokesman Pedro Taimo was quoted as saying on Monday the impact of retrenchments would be "significant on everyone from small businessmen to larger corporations."

Countries like Swaziland and Lesotho stand to lose even more
substantially from mine layoffs. It is estimated that up to 40 percent of the eligible male work force in these two countries are employed on the gold mines in South Africa.

The economic and social consequences of retrenchments could have
potentially devastating effects on such highly dependent countries, analysts said.