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Harmony as an employer

– labour practices and human rights

Management of human resources

Group policies and a centralised human resources and labour relations function guide the management of people, an integral part of line management at the operations. The attraction, retention and development of HDSAs and women remain a priority in South Africa, given the specific imperatives of the mining industry and the country as a whole. Similarly, emphasis is placed on the recruitment of landowners and locals in PNG.

Progress on employment equity and transformational issues is monitored by the Empowerment Committee of the board, which meets quarterly. Employment equity committees have been established as part of the Human Resources Development Committees at mine level in South Africa.

A significant employer

One of the most significant contributions that Harmony can make to sustainability is the employment of large numbers of people, mostly unskilled, drawn from some of the poorest areas in South Africa, its neighbouring countries and in PNG. While many of the mines that Harmony operates have been in existence for many years (some up to 60 years), it is true that many of these would have been closed (and some in fact were) by their former owners. Further, Harmony has been one of the most significant investors in the mining industry in South Africa in recent years, investing in new projects that will continue to employ people over many decades. In PNG, where the MMJV is currently ramping up to full production, Harmony is set to be a significant employer as well.

As at the end of June 2009, Harmony’s total employee complement was 45 685 (FY08: 48 676), made up of 38 295 permanent employees (88%) and 7 390 full-time contractors (12%). This was made up as follows:

• In South Africa, Harmony employed 42 278 people (FY08: 47 038), made up of 37 316 permanent employees (88%) and 4 962 contractors (12%). Contractor employees are largely fixed term contracts (either by time period or by a project completion).
• In PNG, there were 3 407 employees (FY08: 1 595), of whom 979 (29%) were permanent employees and 2 428 (71%) were contractors. In PNG, the contractors are largely construction-related and their contracts will expire at different times aligned with the completion of the project. The construction at Hidden Valley is the main reason for the large number of contractors. As this construction draws to a close, contractor numbers will decrease.

Where circumstances (such as the market, costs or mine life) dictate, restructuring is undertaken. However, Harmony’s strategy is to mitigate job losses where possible by transferring employees in jobs that are no longer viable to the newer projects. By transferring more than 4 251 employees in South Africa in FY09, these job losses were avoided.

Employment statistics as at 30 June 2009

	Employees		Contractors		Total
Operation	FY08	FY09	FY08	FY09	FY08	FY09
Tshepong	4 917	4 970	212	146	5 169	5 116
Virginia	6 550	6 731	210	371	6 736	7 102
Evander	5 045	4 831	623	732	5 688	5 563
Elandsrand	5 218	5 262	672	716	5 908	5 978
Bambanani	3 026	2 255	121	538	3 541	2 793
Masimong	3 044	3 033	108	142	3 160	3 175
Target	1 599	1 672	359	431	1 765	2 103
Kalgold	226	231	220	96	398	327
Joel	1 430	1 480	36	55	1 438	1 535
Doornkop	1 368	1 364	1 350	1 027	2 677	2 391
Phoenix	536	627	45	193	582	820
Phakisa	1 384	1 964	417	277	1 656	2 241
Total Services	1 856	1 868	343	156	2 185	2 024
EOH	546	627	55	21	586	648
Randfontein Medical Services	284	327	117	60	396	387
Evander Medical Services	73	74	2	1	72	75
Total (South Africa)	37 102	37 316	4 890	4 962	41 957	42 278
Total PNG	749	979	846	2 482	1 595	3 407
Total (Group) Turnover	37 851	38 295	5 736	7 390	43 552	45 685

Turnover

Given the skills development crisis in South Africa, and the need to develop HDSAs and women within the company, Harmony very closely monitors its levels of turnover, particularly amongst skilled employees. The turnover figure for the group was 18% in FY09 (FY08: 14%) - 9% in South Africa and 14% for externally-resourced employees and 32% for locally-resourced employees in PNG. However, if all involuntary separations in South Africa are excluded (that is, those jobs made redundant as a result of ill health or normal retirement), then the turnover level was 6% in South Africa.

A range of initiatives has been applied in PNG in order to extract and retain key employees. A change in the recruitment strategy for locally-recruited employees as well as a review of the remuneration structure at PNG enabled the operation to attract and retain employees during the year. Harmony does not record turnover level by gender or age.

Human resource development

Harmony has endeavoured, over the past three years, to ensure that its human resources systems are geared to identify employees with potential, to develop and train employees for job progression and to reward employees and teams for performance. Performance and career development takes place on a regular basis throughout the company. Individual and team-based performance is recognised through incentives, bonuses and (where the employee is not part of the collective bargaining unit) through personal performance evaluation and reward. It is important to ensure that employees are evaluated and rewarded for those inputs and outputs on which they have a direct impact. Matters relating to sustainability therefore feature as key performance indicators for senior and middle management and in certain disciplines, but are not generally applicable to all employees. The exception is safety, where production bonuses at all levels of the organisation are directly related to safety performance.

The majority of Harmony’s employees in South Africa are unionised and relationships, including wages, conditions of service and other issues, are achieved through negotiated settlement. Individual performance reviews are therefore not conducted. In line with the Mining Charter, however, career development plans have been put in place for identified categories of employees. As part of this career development, discussions and panel interviews are conducted with identified employees so as to meet the company’s career progression plans and to allow individual employees the opportunity for development. This process will continue in FY10.

Performance reviews were conducted with all employees outside of the bargaining unit during the year, as individual and career development plans form part Harmony’s performance management process. These reviews are concluded between the employee and his/her supervisor on a quarterly basis and signed off by both parties.

Employee benefits

Legislation or collective bargaining agreements govern many of the benefits, conditions of service and salaries for a large majority of the workforce in South Africa. Other benefits that are provided to employees, other than salaries, include: leave, annual or performance bonuses, housing/housing allowances, home ownership benefits, funeral fund, medical aid, maternity/paternity leave, disability coverage, ifel insurance, and provident and pension funds. Share incentive schemes are in place for management. Similarly, employees receive more benefits than contractors in PNG.

Provision is made for employees post-retirement through pension and provident funds. Pension funds are the responsibility of the company, and its exposure here is limited to its annually determined contributions. Provident funds are funded on an accumulation basis through employer and employee contributions which were fixed when the funds were constituted in South Africa. A total of 29 866 employees belong to the Mineworkers Provident Fund and 7 286 belong to a pension fund. The provident fund provides for a funeral benefit, risk benefits and retirement savings; whilst the pension fund provides for risk and retirement benefits. Full details of retirement benefit obligations can be found in the Annual Report. There is a defined contribution arrangement for employees in PNG.

Social and Labour Plans (SLPs)

SLPs have been developed for each of Harmony’s South African operations in line with the requirements of the Mining Charter. Future forums have also been set up at each operation to undertake collective social plan activities.

Collective bargaining

Employee relations at Harmony are regulated by legislation and industry agreements covering the prescribed minimum levels of compensation and benefits: trade union access and membership, the right to strike, mandatory compensation in the event of termination for operational reasons, employment equity practices, compensation for occupational illness or injury on duty, and the provision and financing of training programmes. This is typical of mining companies in South Africa.

The group fully supports the process of collective bargaining at mine, company and industry levels, as well as employees’ rights to freedom of association. Harmony undertakes collective bargaining in respect of wages and conditions of service through the Chamber of Mines.

The National Union of Mineworkers (NUM), Uasa and Solidarity are the three major unions recognised by Harmony in South Africa. Approximately 87% of the company’s South African workforce is unionised, with a further 3% covered by collective bargaining (agency shop) agreements.

Union representation at Harmony

	No of employees	% employees
NUM	28 124	75%
Uasa	3 688	10%
Solidarity	812	2%
Total - unionised	32 624	87%
Covered by collective bargaining agreements	1 134	3%
Non union	3 558	10%
Total	37 316

Annual wage negotiations at the South African operations were concluded in July 2009. The cost to company resultant from these negotiations was a 9.2% increase in respect of all demands submitted.

In PNG, wages are guided by independent market research that compares mining, oil and gas companies in the region. Industrial relations at Hidden Valley have been established through regular dialogue between management and employees via the monthly Grievance Committee. Employees at PNG are not unionised, however, employment is guided by a Memorandum of Agreement (MOA) between the Landowner Association, the company and the government. The MOA governance process requires that, when qualifications and experience are equivalent, employment preference is given to local and landowner candidates before individuals from other provinces or countries. Compliance with this agreement is a critical issue in maintaining Harmony’s licence to operate. Harmony does not consider that there are threats to collective bargaining of freedom of association in South Africa or PNG.

While no statutory minimum notice period in respect of operational changes is stipulated in Harmony’s collective agreements in South Africa, there are prescribed processes both in the statutes and collective agreements that have to be completed before any significant operational change can be implemented. The Labour Relations Act in South Africa governs the minimum notice period required in respect of organisational change affecting 50 or more employees. A 60-day notice and consultation period regarding any proposed restructuring or organisational change is allowed in terms of Section 189A of the Act.

There are no state-regulated minimum wages in the mining sector in South Africa. Harmony's employees are paid in excess of the minimum wages set for the agricultural and domestic workers' sectors, and in line with minimum wages agreed through collective bargaining processes. In PNG, the employees are also paid in excess of the set minimum wage.

Localisation in PNG

Localisation is the process of ensuring that key technical and managerial roles, initially filled by externally recruited employees, are progressively occupied by locally recruited employees in accordance with the three separate Joint Venture Companies training Plans, which have been submitted to the PNG Department of Labour and Industrial Relations. The objective is to initially operate Hidden Valley with 8% non-citizens (currently 9.5%), with this figure being reduced to approximately 4% within a four year period.

	Total number of positions	Total number of incumbents	Positions currently localised	% Localised
Hidden Valley Mine positions
Managers	20	14	2	10%
Co-ordinators	41	19	14	34%
Professional appointments	42	30	28	67%
MMJV positions
Managers	6	4	3	50%
Co-ordinators	10	7	7	70%
Professional appointments	22	18	18	82%
Total	141	92	73	52%

Diversity and equal opportunity

In South Africa, employment equity legislation and the MPRDA guide employment equity practices and programmes. Employment equity legislation exists mainly for the promotion of equal opportunity and fair treatment through the elimination of unfair discrimination and the implementation of affirmative action measures to redress the imbalances of the past, particularly in respect of HDSAs in management and women in mining.

Harmony’s employment equity plan, and progress against this plan, are reported on an annual basis to the Department of Labour and the DMR.

A diversity management programme has been implemented to encourage diversity within the company, to embrace diverse social backgrounds, cultures, races, genders and generations.

Diversity in PNG

Diversity in management

The Mining Charter requires that HDSA employees (including white women) make up 40% of management in South Africa by 2009. The representation of HDSAs in management for the period ended June 2009 was slightly behind target, at 37% (FY08: 31%). Many of the recruitment, development and retention initiatives put in place by the company are specifically focussed on HDSAs. It is Harmony’s policy to recruit employees locally as far as this is possible.

While Harmony endeavours to draw its employees from local communities, the company does not discriminate against foreign labour. At Harmony’s operations, foreign labour (that is labour drawn from outside the borders of the country) comprises 29% of the total workforce, against 31% in FY08 and 32% in FY07.

It is the company’s intention to employ as many locals (locally resourced employees – LRE) as possible in PNG and employees are largely drawn from local landowner groups. Expatriate (external resourced employees – ERE) and contractor employees are only employed when necessary for specialist knowledge or skills. At the end of June 2009, there were 568 ERE employees employed at PNG operations, which is 17% of the total workforce. The MOA between the Landowner Association, government and the company guides this process, and preference is given to local and landowner candidates when positions become available.

A process has begun whereby key technical and managerial roles filled by non-citizens are progressively occupied by PNG nationals, in line with the training and Localisation Plan submitted by the company to the PNG Department of Labour and Industrial Relations.

Women in mining

The Mining Charter stipulates that 10% of the total workforce should consist of women by 2009. At the end of June 2009, there were 4 157 women in the group (11%), compared with 3 578 in FY08, or 9% of women in the total workforce. Women in the core disciplines (engineering, mining, ore reserve management and metallurgy) were 2 578, 8% of the total employees in those disciplines. Various steps have been taken to accommodate women in the underground mining environment.

The challenge to find suitable jobs for pregnant women who work in underground environments is ongoing. Despite the impact on labour planning and cost, Harmony endeavours to accommodate pregnant women by offering jobs on surface.

Another challenge is the issue of sexual harassment, which is being experienced by women working underground, and includes victimisation and obstruction. A sexual harassment policy is in place and is applied to all reported cases.

In addition, protective clothing provided is currently designed for men and are not comfortable for women employees who resort to wearing their own clothes underground which is not satisfactory. This is an industry-wide issue that was dealt with at the June 2009 wage negotiations. A preliminary report is due to be finalised by the Chamber of Mines at the end of October 2009 to address this issue.

Employment equity statistics (South Africa)

	Male		Female		Foreign nationals		Total
Occupational Levels	Of colour	White	Of colour	White	Male	Female
Top management	2	7	0	1	0	0	10
Senior management	22	63	7	7	0	0	99
Professionally qualified and experienced specialists and mid-management	143	405	45	58	7	0	658
Skilled technical and academically qualified workers, junior management, supervisors, foremen, and superintendents	2 445	1 961	598	232	570	9	5 815
Semi-skilled and discretionary decision making	12 365	68	1 256	85	7 935	84	21 793
Unskilled and defined decision making	5 015	45	1 501	4	2 106	270	8 941
Total	19 992	2 549	3 407	387	10 618	363	37 316

Discrimination

While Harmony endeavours to draw its employees from local communities, the company does not discriminate against foreign labour. At Harmony’s operations, foreign labour (that is labour drawn from outside the borders of the country) comprises 29% of the total workforce, against 31% in FY08 and 32% in FY07.

MMJV, Harmony’s joint venture in PNG obtained specific government approval to recruit females specifically in the surface mining environment. As a result, there are plans in place at Hidden Valley to address the gender balance of employees, and eight heavy equipment women operator trainees were recruited in FY08. In addition, a process of transferring women landowner operators (who were part of the construction team) to the open-pit operations has started. Meanwhile, aptitude tests of women landowners are ongoing to establish a pool of available candidates. In FY09, 16% of the workforce in PNG comprised of women, exceeding the 15% target set in FY08.

There is no difference between the salary scales for men and women at Harmony.

Breakdown of employees

	Total number of	Gender (number)		HDSAs
	employees	Men	Women	HDSA	Non-HDSA
Board	12	10	2	5	7
Exco or management committee	10	9	1	3	7
Management	744	631	113	218	526
All employees	36 347	32 395	3 952	23 334	13 013

In FY09, the company commissioned an audit on discrimination in South Africa. No incidents of discrimination were reported in South Africa or PNG.

Human rights

As a company domiciled in South Africa, Harmony is bound by the South African Constitution, within which human rights are enshrined. South Africa endorses various International Labour Organization (ILO) principles relating to the prohibition of forced, compulsory or child labour.

In FY09, no contraventions of these principles were alleged or reported, and no operations are considered to be at risk in this regard.

In South Africa, management and the unions have signed a declaration of commitment to eliminate racism and celebrate diversity.

Training and development

Harmony invests in the training and development of current and potential employees. The information provided below relates largely to the South African operations which are directly and solely managed by Harmony. Expenditure on the group’s training and development programme amounted to R21.5 million (FY08: R35.5 million). The decrease is due to re-structuring and the sale of the Randfontein operation, resulting in fewer employees. Expenditure on training and development in PNG was R3.2 million

During the year, some 40 164 employees (around 95% of South African employees) received some form of training in the following areas: mining, engineering, metallurgy, ore reserve management, human resources, occupational hygiene, supervisory development, change management, and technical and soft skill training. In view of the shortage of engineering and artisanal skills, this remains an area of great emphasis.

While Harmony’s programmes aim to address the training and development needs of all employees, there is a specific emphasis on training and development initiatives to facilitate transformation and, in particular the development of a literate workforce that has the potential to develop and to meet in the future the skills needs of the company from within. There are various initiatives in South Africa ranging from Adult Basic Education and training (ABET), skills development and learnership programmes, the Harmony Bridging School, as well as the provision of bursaries and study assistance to current and prospective employees.

In PNG, various employee training programmes have been developed based on a skills matrix on the requirements of each project. By the end of June 2009, 1 906 employees had received formal training during the year, 1 509 facilitated internally and 397 externally sourced training.

The training of landowners in the operation of heavy equipment continues to be of great importance in PNG. To this end, the Hidden Valley training Simulator continues to be used to test new operator applicants as well as for the training and retraining of the existing landowners. A total of 168 landowner employees have been trained and are fully certified as fully competent in the operation of haul trucks, dozers and a range of other ancillary equipment such as graders and loaders.

Adult Basic Education and training (ABET)

The provision of basic literacy and numeracy skills to employees is a priority for the company, both from a human resources development perspective, but also as this is a specific area to which Harmony has made certain commitments in its SLPs. ABET was provided to a total of 2 534 employees in FY09 on both a full-time (1 363 employees) and part-time (1 171 employees) basis. The total cost of ABET to the company in FY09 was R12.7 million (FY08: R140 million). Harmony’s ABET programme is well-resourced, with a teaching/administrative staff of 104. There are two full-time centres in the northern region of operations and three in the south, while part-time classes are offered at almost all company hostels. Employees are offered incentives, such as payments for successful completion of all ABET levels (funded by the Mining Qualifications Authority or MQA), while full salaries and bonuses are paid to full-time learners.

Skills development plans

As skills development is both a national and company priority in South Africa, annual workplace skills development plans and training reports are submitted to the MQA each year to identify Harmony’s future training requirements. training in line with the National Qualifications Framework (NQF) standards is largely conducted at Harmony’s in-house training centre, which is ISO9001-accredited and meets the requirements of the MQA. Other accredited service providers also undertake training for the company.

Harmony’s training and development initiatives cover the core disciplines of mining, engineering and metallurgy, as well as safety and health. Skills development amongst HDSAs and women is a priority. During FY09, 37 316 employees received training at Harmony’s training centre, of whom 67% were HDSAs and 7% were women.

The company submitted its Annual training Report and Workplace Skills Plan to the Mining Sector Education training Authority (SETA) and qualified for the return of 50% of the 1% levy paid to the MQA owing to training the company undertakes.

Lifelong learning

The company also has a programme for skills management and lifelong learning to support continued employability and assist employees in managing career endings in South Africa. During the year under review, about 500 employees completed skills development training across all operations in line with Harmony’s SLPs. The skills provided ranged from electrical/electrical repairs, welding, carpentry, plumbing, sewing, catering, motor mechanics and brick layering to scaffolding. These skills also promote a new self-employment culture to improve the quality of life in the communities where Harmony operates.

Learnerships

Learnership programmes have been in place at Harmony in South Africa since 2003 to improve the workplace skills of employees. These have been developed in line with the South African Skills Development Act. Learnerships lead to recognised qualifications, approved by the SETA and registered with the Department of Labour, and thus play an important role in development progression. Employees with learnerships are equipped with transferable skills and qualifications to their benefit both inside and outside the company.

As at the end of FY09, 381 learnership candidates (FY08: 390) were enrolled in mining (53%) and engineering (47%). Of the total number, 96% are HDSAs and 7% are women.

Graduate development programme

This programme was launched in 2005, under the auspices of the MQA, to address the skills shortage in the sector and assist in the transformation process. The target group is young unemployed HDSAs who have completed degrees or diplomas in the scarce skills disciplines as identified in the MQA Sector Skills Plan such as: mechanical engineering, electrical engineering, electro mechanical engineering, mining engineering, jewellery design and manufacturing, metallurgical engineering, chemical engineering and mineral processing, analytical chemistry, geology, environmental management, mine surveying and industrial engineering.

Candidates for the programme are required to complete a two-year structured development programme with an industry host employer. Over this two-year period, a grant per candidate per quarter is made available to the host employer to cover the costs of training, allowances, travel, accommodation, medical cover, unemployment insurance fund, insurance and personal protective clothing.

In FY09, 19 candidates were employed under this scheme, providing a potential pool of employees for Harmony in the future.

Bridging School

The aim of the Harmony Bridging School is to assist historically disadvantaged matriculants to improve their final Senior Certificate results over a period of 10 months, to enable them to further their studies or obtain a tertiary qualification. The programme benefits candidates from the communities surrounding Harmony’s operations, and from labour-sending areas for the dependants of employees. While again providing a potential pool of new recruits to Harmony for the future, the programme delivers into a key failure in the South African education system, where potentially promising students are simply not identified or nurtured through final year school examinations.

In FY09, a total of 18 students were selected for the programme in the mining, engineering and accounts disciplines. These learners will be employed in their respective disciplines within the company after their successful completion of the academic year in December 2009.

Bursaries and study assistance programmes

In South Africa, bursaries continue to be awarded to talented HDSAs who cannot afford a tertiary education in the fields of mining, engineering, geology, surveying, sampling, metallurgy and accounting. In FY09, 29 bursaries were awarded – all bursars are HDSAs and 30% are women.

In FY09, as part of this programme, Harmony’s PNG operations provided approximately K580 000 in educational support to 734 learners attending 257 primary and secondary schools. This study assistance programme is focused on paying school fees for employees’ families at PNG.

Accommodation and living conditions

Promoting home ownership and the integration of mining communities into local structures are part of Harmony’s housing strategy. This policy is implemented at all company operations through housing forums, in which unions play an active role.

In FY09, 20 907 (65%) employees resided in 12 high-density, single-sex accommodation blocks (hostels); 12% in subsidised accommodation and 23% in their own accommodation (where the company pays the employee a living out allowance). As planned, the number of hostel residents decreased by 3 129 (18%) from FY08 (17 778) and this is expected to decline another 10% during the FY10. This decrease is due to employees choosing to move out of company single-sex accommodation and to receive a living out allowance.

In line with company policy to improve the quality of company accommodation, the conversion of the Welkom 1, Evander 2 and 5 hostels into family units is under way. A feasibility study is being carried out and capital application will be made as soon as this is completed.

Consultation with unions on the company’s accommodation strategy and, in particular, the drafting of policy principles, setting conditions of sale for mine houses and identifying hostels for conversion either into family or single units is ongoing.

Furthermore, the hostel de-densification project is continuing. By year-end, 90% of hostels had been converted to accommodate two persons per room.

Since 2000, a total of 3 554 houses have been sold to employees in support of the company’s home ownership programme. Joint venture projects for new housing developments in Randfontein and the Free State are currently being pursued with municipalities and property developers.

The budget in FY09 was R10 million for Tshepong hostel, at which the upgrading of the ablution facilities was completed. A budget of R9 million has been set for the upgrading of Masimong hostel in FY10.

In FY09, catering costs amounted to R13.9 million for employees residing in company hostels. The group catering manager undertakes quarterly audits with a registered dietician to monitor and evaluate nutrition. The catering manager reviews the menus on an annual basis and carries out a menu analysis to ensure a balanced diet for the employees.