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Labour relations in the mining sector

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Vinatea y Toyama are the largest boutique firm focusing on HR law in Peru
Last February we published a study on labour relations in the mining sector. Here we summarise the main conclusions gathered from talking to the sector's leaders.

The mining sector in Peru is highly unionised. One in four workers members of a trade union, and workers in medium and large companies are, in most cases, represented by at least one union. 

Last February we published a study on labour relations in the mining sector, which included an analysis of employment figures, regulatory analysis, dispute resolution criteria and a survey of 25 human resources leaders in large and medium-sized mining companies. Here we summarise the main conclusions, as well as the areas for improvement that we gathered from talking to the sector’s leaders. 

First, the mining sector, in figures, has the lowest rate of labour informality among the main sectors in the national economy, with 54.4% (20 points below the national average). However, it is one of the sectors in which informality has important environmental, social, economic and political effects. This relationship between a low level of informality and a high level of severity in terms of its consequences is a good indicator of what is at stake in promoting a sustainable and compliant mining industry. 

In terms of formal employment, two characteristics stand out. Mining is the sector with the highest rate of unionisation and it this gives rise to a significant number of disputes before SUNAFIL and the courts. Therefore, good labour relations and good labour-law practices are not minor concerns. Indeed, they may even be more critical than in other sectors.  

As we have said, around one in four workers are unionised and almost all medium and large companies have at least one union. On the other hand, before dispute resolution bodies, we see striking figures for a sector that only represents 3% of (formal) national employment. Mining disputes are among the most likely to be fined by SUNAFIL at second instance. Before the courts, the number of lawsuits filed by mining companies is significant. Mining is not the sector with the most inspections or lawsuits, but it is one in which conflicts tend to reach the courts and, in the case of SUNAFIL, in which inspections often lead to a fine. 

This situation is compounded by increasing regulatory pressure. At the end of last year, Congress had already presented bills to implement approximately 100 new labour standards. For its part, the previous government issued two important Supreme Decrees. The first banned labour outsourcing in nuclear activities, and the second made changes to the rules on trade unions and reduced employers’ rights in collective bargaining. 

The leaders who contributed to the study allowed us to identify some additional issues. The most revealing findings concern the most frequent complaints. Most respondents (76%) agreed that the improvement of general services (canteens, food, rooms and transfers) was a recurring demand, followed by wage increases (64%), improvements to health and safety at work (56%) and demands for changes in working hours, jobs and functions (40%). 

On the union side, collective bargaining already seems to have become a familiar process for the parties. Most respondents reported that their negotiations lasted for a short period of time (on average 5 months) and almost all of them were concluded by direct agreement. Thus, although strike action is often a threat in negotiations, the risk of strike action is usually relatively low. 

In terms of remaining challenges, one of the most important concerns increasing women’s participation in the industry. The mining sector has only 10% women on the payroll. Leaders also identified (52%) the need for managers and bosses to take more responsibility for labour and human resources management. Other challenges mentioned included attracting and retaining staff in key positions (44%) and improving contractor management (40%). The latter is particularly important, as a bad contractor often has a negative impact on the working environment and can lead to lawsuits or fines for the user company. 

At the end of the study, we created a space for dialogue concerning human resources and labour relations. In this, the leaders agreed that focusing on the worker, his or her well-being and that of his or her family is key to improving labour relations. This is a comprehensive approach, which will require making some of the improvements identified above. In order to succeed, this approach will need to help workers identify more with their work, while at the same time recognising good management by employers. 

For more information about employment law

Ricardo Valdiviezo Puescas
Head of Research and Development - Peru
Vinatea y Toyama
Andrea Villanueva Begazo
Study Sector Research Analyst - Peru
Vinatea y Toyama

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