Thursday, October 22, 2020

Diamond beneficiation faces meltdown

Scores of Botswana’s biggest diamond cutting companies were this week speaking of closing their operations here, while some, which have not yet opened shop, are reconsidering their decisions, claiming unsustainable wages and sabotage by workers and unions.

Managers of local cutting firms who spoke to Diamond Intelligence Online claimed that the Botswana Diamond Sorters and Valuators Union (BDSVU) had orchestrated sabotage against a number of factories. “These tactics include a sudden dramatic decline in factory productivity; a sudden alarming rise in breakage of stones; a sharp increase in sloppy polishing, which has resulted in almost a third of the output requiring repairs in other polishing centers; and a rise in employee absenteeism”, reported the online publication.

BDSVU administrative Secretary, Modiri Bontshetse, and chairman, Handy Motiki, however, told The Sunday Standard that the union has never sanctioned any act of sabotage. “We would not want any of the firms to close down because they are creating employment and increasing our membership. There is no way we can pursue a strategy that will stifle our growth,” said Motiki.

What is emerging though is that the acrimony between the cutting firms and the unions is deep, long-standing and likely to fester for sometime. While the cutting firms seem unhappy with the country’s minimum wage laws and want to pay workers according to production, the union, on the other hand, feels the minimum wage is too low and subscribes to the living wage policy.

Wage negotiations between Eurostar and Leo Schachter Botswana, on the one hand, and the union, on the other, have reached a deadlock and have entered into a law ÔÇô proscribed dispute resolution process. The problem is not helped by Eurostar’s refusal to go for arbitration. Even before the wage negotiation, the relationship had already been poisoned by the union’s previous fight with Leo Schachter Botswana, because the company allegedly would not give sick workers permission to go to the hospital and, in cases where they went to the hospital, the company made unauthorized deductions on their wages. In one case, a manager in one of the companies was charged and found guilty for using abusive language against one of the workers.
Minerals Energy and Water Resources Minister, Ponatshego Kedikilwe, and Labour Assistant Minister, Utlwang Matlhabaphiri, have had to intervene to try and diffuse the situation.

Insiders say, so great is the crisis engulfing the diamond cutting and polishing industry that the question is no longer about whether the union and the companies will resolve their differences, but whether the companies will continue operating in Botswana.
Elliot Tannenbaum, principal of Leo Schachter Botswana, was quoted by Diamond Intelligence Online saying, “We have been brought to an extremely difficult, if not impossible, situation, one that defies business logic and which puts our ability to maintain our Botswana manufacturing company as a financially sustainable and successful business, in a great degree of uncertainty.” A lock-out will not solve the problems, but there may be few alternatives left.

Kaushik Mehta of Eurostar, one of the active manufacturers in Botswana, on the other hand, was quoted saying “incentive-based compensation has been a key driver of competitive and sustainable diamond cutting and polishing centers all over the world, as it is most evident in Belgium, Israel, India and China. Why should Botswana be any different? If incentive-based compensation is taken away in Botswana due to union action, we will effectively be rewarding inefficient workers at the expense of diamond manufacturers. Clearly, a system that penalizes diamond manufacturers is not a sustainable, long term strategy.”

Diamond Intelligence Online wrote that, cutting and polishing “factories which are currently in various stages of building and development are anxiously following the tribulations suffered by their colleagues. We know of one company that is rethinking its future in Botswana. We know another company that has advised De Beers that if labour costs run out of control, the DTC will have to lower rough selling prices or the factory will relocate to China. De Beers has made specific commitments to government on reaching certain beneficiation targets so the company should have a vested interest in solving these issues. It is not clear what leverage it has ÔÇô if any.”

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