Income inequality situation in the mining industry of Ghana (II)

Author: Prince William Ankrah, Abdul-Moomin Gbana, Emmanuel Adjei-Danso, Anthony Arthur & Sampson Agyapong

The mining industry in Ghana comprised two broad operations; those who deal with direct production as well as trade on the international market; and those providing auxiliary support services to production companies.

Gold is the major mineral exploited in the mining industry and contributes substantially to the industry’s output in terms of mineral revenue and production. In view of that, the study concentrated much more on gold mining. The study sampled seven  operating mines, but for the purpose of convenience, and without compromising the outcome of the research, these areas were merged into four specific companies as follows; AngloGold Ashanti (Iduapriem), Goldfields Ghana Ltd (Tarkwa & Damang), Newmont (Ahafo & Akyem) and Golden Star (Wassa & Bogoso). Majority of these companies were in a cluster with the exception of Newmont Ghana which is located in both the Eastern and Brong Ahafo Regions of Ghana. Goldfields (Tarkwa & Damang), Golden Star (Wassa &Bogoso) and AngloGold Iduapriem are all located in the Western Region of Ghana.

These four-major gold producing companies in the industry were selected on the basis of their industrial gold output share in 2014, the employee strength, presence of expatriate and lastly the existence of union in those companies. Pay roll data of salaried workers was used as the basis for analysis and in all, 5204 workers made up of expatriate, management, senior and junior staff served as the unit for analysis.

The study resorted to the Gini coefficient and Kruskal Wallis test analysis which measures the distribution of income with reference to the median. The non-parametric test option was chosen. Data analysis was done using Microsoft Excel, SPSS and STATA. The map below shows the selected mining areas used for analysis.



Results and Discussion

Production in the mining industry is basically dependent on the strength of both employees and employers (management). Labour in the industry plays a major role in the entire cycle of output generation and profit gains of the industry. The study sampled 5204 workers from four different companies across the country. Majority of the workers (70 per cent) were junior staff, 23 per cent were senior staffs whereas expatriates and management constituted three per cent and four per cent respectively. The strength of senior and junior staffs towards the development of the industry is undisputed and as such a deeper gaze into issues of their welfare was essential. Figure two, below presents the category of staff across the selected companies.

 

 

The number of junior and senior staffs at Newmont and Goldfields were very high as compared to the other operating mines. Goldfields had the largest share of junior staff population of 1506 followed by Newmont Ghana Limited with 1228 staffs. Out of the four companies sampled, expatriate representation was nearly three per cent. Newmont Ghana however recorded the highest number of 77 out of the total of 136 expatriate whilst Goldfields recorded the highest number of management staffs, 120 out of 218. Data on management was not readily available for Golden Star and AngloGold Ashanti (Iduapriem) hence was not included in the analysis of the study.

The realities of income inequality in the mining industry

From the study, the Gini coefficient for income distribution was 0.526 in 2015. This revealed that income distribution was skewed in favour of expatriate and management staff relative to the senior and junior staff, suggesting high level of marginalisation of incomes of those at the bottom. The results from income analysis showed that, 1% increase in that income source (basic salary), all else being equal, increase the inequality gap by 0.0547%. Also, income was unequally distributed (0.526), and the Gini correlation between basic salary and total income was high (0.966), indicating that basic salary favours the expatriate and management staff more than the junior and senior staffs.

Income pattern across the staff category

One of the major concerns of Trade Unions have often been the issue of unfair distribution of income in the industry. Union preach equity in income distribution as employers have also challenged the ideology of income inequality.  Mostly employers are of the view that the differences in incomes across employee category are statistically insignificant. In unraveling whether or not the viability of income difference among the staff category. In view of that a deeper review on the income distribution pattern among workers in the industry where a Kruskal-Wallistest was therefore employed to examine whether or not basic salary significantly differ across the various staff categories of the industry.

Following the Hypothesis

• Basic salaries do not significantly differ across staff category

•Basic salaries significantly differ across staff category

Both expatriate and management staff earned salaries more than the average (median) of GH¢₵2,544.00 (US$795). However, the outcome was different for senior and junior staff. In the case of the senior staff, 4 out of 1192 workers earned incomes less than the median amount. Also, majority of the junior staff (71 per cent) earned below the median income. This shows how income distribution is lopsided in favour of expatriates and management staff relative to junior/senior staff. The median test showed that, incomes significantly differ across the staff category. This claim was valid under both one per cent and five percent levels of significance.