Bridging the gap

THE time-honoured gap between remuneration levels in the coal and metalliferous industries is rapidly closing. However, major discrepancies still exist at operational levels between the two sectors, with metals seriously lagging behind their coal cousins.
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Underground at Newstan Colliery. Courtesy Centennial Coal, Christian Tinder Photography.

Angie Tomlinson

Published in Australia's Longwalls

Traditionally coal has been well ahead of the metalliferous sector in remuneration levels, largely due to the union’s coal award put in place in the 1930s. The old coal miner’s federation had many industrial and political coups over the years, bringing the 35-hour week and better long service and annual leave in the 1970s. Trends show the inequality between the two sectors, partly brought about by the strong coal union, is now closing year by year, with metalliferous and coal remuneration levels now relatively even at the corporate and top mine management levels.

While metalliferous mines have caught up and often surpassed levels set in the coal sector, somewhere along the line coal operators have slowed down.

According to a December 2003 survey by human resources management consultancy McDonald and Company, the average base salary of a metalliferous top underground miner was about $40,000 more than his underground coal counterpart. While bonuses bring the two closer together, the average total variable remuneration (base salary plus bonuses and incentives) still shows close to a $25,000 difference. However, this contrasts with many other coal operational roles which are reasonably even or well ahead of their metalliferous counterparts.

The McDonald industry-supported survey boasts 26 participating companies and covers the vast majority of longwall mines in Australia. The benchmarking survey began in December 2000, following in the steps of a similar metalliferous survey started in 1988. McDonald and Company now compares the two sectors to identify trends and inconsistencies.

Consultancy founder Steve McDonald offered a few reasons behind the discrepancy that emerged at the operational level, relating it to structural differences between the two sectors.

“The role of top underground miner really stands out like a sore thumb. In a metalliferous operation the top miner is the person who controls all other employees, a critical member and leader of the underground team who is rewarded accordingly. While they may not have any formal authority, if a jumbo operator says do something, you do it,” said McDonald.

“Whereas in underground coal there isn’t really a head honcho – it is a far more team orientated environment. To get the longwall going there isn’t one star but a whole group of people working together.”

While a chasm has appeared at an operational level, the trend is generally for an alignment of the two sectors, working its way from the top management levels down. When McDonald first began the analysis, general manager remuneration was similar, but there were substantial differences at all other levels.

“In the intervening two-and-a-half years the similarity in salaries has extended through the management ranks. What is causing it? I think it is just a realignment between the two industries,” he said.

McDonald reasoned the salary difference between the two groups would be hard to sustain when the demand for skills in both industries was similar. He added that the access companies now had to remuneration data and trends had worked towards closing the gap.

At a corporate level, remuneration is almost identical and has been for some time. This came about through company motivation to provide career progressions for senior management.

“If you have one industry that pays considerably below or higher than another part of the industry, that really acts as a barrier for people moving around the organisation. I think the larger companies would be quite keen to move their top managers between coal and metalliferous mining and not run into a salary barrier,” McDonald said.

The nature of the Australian mining industry has also aided the uniformity of remuneration rates, where the demand for skills is national rather than regional or industry specific.

“Mining in some other countries such as the US is regionally focused. Miners in Nevada, Dakota, California - you tend to go to school there, graduate there, get employed there. In Australia the market is far more fluid. One day you could be a metalliferous general manager in Laverton and next week you could be a coal general manager in Emerald. This flexibility contributes to an evening of rates,” he said.

Whilst the trend has been for a uniformity of pay levels, large gaps in favour of the coal industry still exist in roles that are removed from the production process.

“The constraint on the possible trend to ongoing realignment will be internal equity within organisations. Substantial differences are still evident between coal and metalliferous mining remuneration at lower hierarchical levels, and unless these are addressed it is possible that the compression in remuneration evident between hierarchical levels in the coal industry will be exacerbated,” the McDonald 2003 report stated.

The distribution of salaries for peripheral roles such as on-site administration and supply blows out up to 40%; a figure, McDonald commented, which had absolutely no logic behind it. “I think the reason that the rates are so high in coal is the old staff award that has got them those levels of pay. The problem starts to emerge when those rates stay high and manager’s rates don’t increase. People could start asking themselves the question, why have I bothered to do a four-year degree and take on all this responsibility given the differences in remuneration are really not that great?”

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