Thursday, July 16, 2020

Diamond in the rough

Every morning, hundreds of diamond cutters file into Botswana factories. Operating lathes and lasers, they slice, polish and facet the cloudy crystals from De Beers Diamond Trading Company (DTC) into sparkling gems.

Nothing unusual about that, except that all these daily wage labourers are women ÔÇô a major workplace revolution in a country where the words ‘women’ and ‘labourers’ are never uttered in the same breath.
The Botswana Diamond Sorters and Valuators Union (BDSVU) are, however, reading a sinister motive into all this.

BDSUV Admin Secretary, Modiri Bontshetse, believes that because women tend to shy away from unions, they are more appealing to cutting firms that are bent on bringing sweatshop conditions to Botswana. The country’s diamond cutting factories are not exactly India’s notorious cramped, dingy diamond sweat shops where teenage boys and girls do backÔÇôbreaking, eye-soring and lung suffocating toil, BDSUV, however, paint an almost equally grimy image.

Bontshetse and BDSVU chairman, Handy Motiki told Sunday Standard this week that despite promises that the ambitious Botswana beneficiation project would create jobs and improve the lives of locals, their wages barely covered their living expenses, leaving workers in debt. Some workers complain of exposure to toxic chemicals on the factory floors and the firms think nothing of making unauthorized deductions from wages of sick workers who take time off to go to the hospital.

It was all going relatively smoothly for factory owners – until the party poopers arrived in the shape of the BDSVU.
Israeli based diamond consultant and publisher, Chaim Even Zohar, who is fighting in the corner of factory owners, wrote this week in Diamond Intelligence Online that “before the union got involved, Batswana appeared happy. I visited one of these factories early in the year and was surprised that the plant was fully managed by local Batswana, including a lady wielding the scepter of plant manager. Local management and workers were among the best paid in the industry (averaging some 1500 Pula a month), and working hours are less than those set by law.”
Sunday Standard investigations have, however, revealed that local cutting firms have fixed their wages at the P600 minimum wage. While the BDSV does not subscribe to the P600 a month minimum wage and insist on a living wage, cutting firms on the other hand are unhappy with Botswana’s minimum wage policy and feel that workers should be paid according to production. This is the heart of the tempestuous relationship between the union and the manufacturers.

Kaushik Mehta of Eurostar, one of the active manufacturers in Botswana, stresses that “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,” he notes.

Elliot Tannenbaum, principal of Leo Schachter Botswana, clearly frustrated, says, “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.

For sometime, the acrimony between the manufacturers and the union has been emerging in spurts like snapshot: 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. The Union fought with Leo Schachter Botswana, because allegedly the company 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.

Indications are that the cutting factories were this week trying to use Botswana government’s obsession with foreign investment and De Beers’ promise to government that it will reach certain beneficiation targets to leverage their position. Chaim Even-Zohar, who is championing the manufacturers cause wrote in Diamond Intelligence Online that “In the past few months, the handful of manufacturing operations in Botswana have been subjected to industrial action by labour unions, which includes unacceptable elements of harassment and sabotage. The behavior far transcends any good faith negotiations, which are in the nature of labour relations. We want to be cautious in reporting on this sensitive subject as, at the end of the day, for Botswana’s sake, the differences must be settled amicably.

From time immemorial, around the world, the wages of diamond workers have been partly or fully linked to the individual workers’ output. Bonuses, wage increases, etc. are all tied to similar formulas. Apparently, the relevant labour union, the Botswana Diamond Sorters and Valuators’ Union, doesn’t like that. One local factory, after giving over the last two years wage increases which are substantial by any measure, is all of the sudden confronted with a labour union demand for additional significant across-the-board wage increases for 2006. The employers resist these demands, and they have entered into a law-proscribed dispute resolution process.

This should be a routine matter and certainly no reason for an article or editorial. What has poisoned the atmosphere are the tactics employed by some Botswana union members. 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. These examples are just a few of the tactics being used. This is enough to scare any potential foreign diamond manufacturer away ÔÇô and these are ominous signs that this may be what is indeed happening.
Zohar further wrote that Botswana “unions have never dealt in a big way with foreign investments and investors, and certainly not with industry.

Botswana is ranked in Africa as the country with the lowest direct foreign investment on the continent. In terms of figures, it is almost nil. The government is trying to remedy that situation and has made tremendous efforts to convince De Beers to partner with them in securing private entrepreneurs to establish factories in Botswana. Both government and De Beers should feel some responsibility towards the companies they invited.

“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.”

In some instances, Zohar plumbed the murky depths in an apparent attempt to blackmail government into giving in to manufacturers’ demands. In one case, he goes so far as to defend a manufacturer who used abusive language against a Motswana factory labourer: Some of the tactics are particularly distasteful. One Israeli supervisor, upset about the apparent deliberate over-polishing of a stone, exclaimed in his broken English, the word “bullshit” as a synonym for “nonsense.” The lady worker filed a complaint and the supervisor was hauled to a police station, where he was humiliated (and reminded that by law flogging with a stick is allowed). He then had to admit to having used abusive language. He was fined and now, apparently, has a criminal record. This kind of event shakes the expatriate community; they feel helpless.”

In other instances, Zohar adopted a condescending tone: The manufacturing companies that are coming to Botswana are all committed to the transfer of skills, training, teaching and education, to providing employment, to creating added value. It’s not that foreign money is really needed as the government has, thanks to diamonds, plenty of resources. What is needed are the highly professional expatriates that are willing to live in far less than ideal circumstances in Botswana and to train local Batswana in diamond cutting and management.

What the recent union actions are achieving is that the foreign investors will find it harder if not impossible to recruit the right people to come and work in Botswana. We talked to one expatriate who was not sure whether he was going back to Botswana. Any false complaint might throw him into jail, and there’s almost no ability to defend or protect himself.

At times, local manufacturers and their hard hitter ÔÇô Zohar seem to be tearing their hair out over their inability to win government and opposition parties over to their side: “Though the law allows some government interference in union matters (and legislated a role in the Labour Department to act as mediator or conciliator) the unions operate rather autonomously. They are not linked to political parties ÔÇô and this makes them a political force to reckon with. Every political party seeks to carry their favour,” wrote Zohar.

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