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CHAPTER 4:  (continuation) Labour Market in PNG Mining

By:  Benedict Y. Imbun - UPNG Press 2000.

| Training | Localisation | Chapter 4 Summary| Table of contents |

.... The training problem in government institutions has been exacerbated by inadequate funding and the lack of competent trainers, reflecting one of the standard problems of training in formal educational institutions: the lack of flexibility to respond quickly to changing workplace needs (UNDP/ILO, 1993:202).

The extensive use of company-based training has led to the development of government policies in this area to help regularise the training of the national workforce. The Central Government continues to press for more opportunities to be made available for Papua New Guineans to undertake training schemes in order to increase their skill levels and to localise currently expatriate positions. The 1989 National Training Policy White Paper was the first national attempt prepared by the government to coordinate training in the country. It recommended the introduction of a two per cent levy on payrolls, which is offset by the amount companies actually spend on their own training (PNG Government, 1989). The DLE through the National Training Council closely monitors the training schemes of firms operating in the country, including mining firms.

Finally, training has become an indispensable aspect of mine operation to cope with the continual changes that are occurring in the technology and in the labour force. The training schemes each mine operates are dictated by many variables, the diverse workforce, the type of technology in operation, the ore type and grade, the location, and the degree of capitalisation. Programs are also influenced by individual company policies which follow a wide range of models for optimise workforce operations.

All PNG mines sponsor two types of training: on-site and external through scholarship funds that finance tertiary training for Papua New Guineans in educational institutions both in the country's secondary and tertiary institutions and also in Australian colleges and universities. Generally, the bulk of the training undertaken by the mining companies is in the form of on-the-job, short, practical courses designed for the immediate needs of the mines. While some of the courses are said to be continuous or to repeat from year to year, they are commonly induction courses mounted on an ad-hoc basis to service labour demand at the point of production. McGavin in a study on enterprise human capital formation in PNG found that employees gave a 'thumb down' to on-the-job training and wanted instead off-job or 'formal' training (McGavin, 1990:81). However, the experience at Misima has been that management relies on workplace training to minimise costs and to educate workers appropriately for specific company needs.

Of the mining companies operating in the 1970-88 period, BCL had by far the largest training scheme for its employees and sponsored many promising students in educational establishments. For on-site training, it operated a mine training college, recognised as the best equipped and staffed technical training facility in the country, which provided training in a wide range of trades including heavy equipment operation, electronics, computer operation, management, medical aid and security. From 1970 to the end of 1988 nearly fifteen thousand Papua New Guineans were enrolled in on-site courses mainly in this mine training college which had a regular staff of around ninety-three full-time instructors, half of whom were attached to working departments of the project. In the same period there were another four hundred Papua New Guineans sent to colleges and universities elsewhere, courtesy of BCL which provided scholarships and maintenance funds for study. These trainees were welcome to join the company upon completion of studies but they were not obliged to do so (Oliver, 1991:150).

Other mines have similar arrangement for training and sponsoring of students, but on a more modest scale. Ok Tedi's strategy of training Papua New Guineans to assume operational, technical and administrative roles developed in the full production period after 1988 and 1989. The mine trained a complete local workforce which now operates haul machines and other units of mining equipment. It commenced operations in 1984 with very few skilled workers and a mass of unskilled subsistence farmers. Much of the training at that time was on the job 'learn as you work' under the auspices of foremen and senior employees. Many semi-literate Ok Tedi villagers were recruited and then placed under qualified skilled workers. They were taught to become truck haulers and operators of heavy equipment, welders, motor mechanics, lumbermen, rotary-drill operators, diamond drillers, laboratory assistants and road maintenance workers. This mode of training proved a success and Ok Tedi recruited only a minority of skilled workers from other parts of PNG.

Apart from the usual on-the-job training given by foremen and supervisors Ok Tedi has established a training centre modelled on the BCL experience. The centre enrols apprentices and graduates recruited from technical colleges and universities. Training is offered in trades such as air-conditioning, diesel mechanics, electrical engineering, foundry, mechanical engineering, welding and building. The duration of the courses varies but usually they are run over a four year period. Training costs for apprentices and others have been very high and in 1989 alone stood at K1.6 million . This money represented 8.3 per cent of OTML gross wages for national employees which easily exceeded the goals of the government's 2 per cent national training levy (McGavin, 1990:27). Most graduates are subsequently employed by the company.

A separate Graduate Development Scheme (GDS) has been set up to allow Papua New Guineans to localise some of the senior positions both in the administration and mine operation areas. The graduates are mainly qualified in the disciplines of psychology, commerce, geology, chemistry, and engineering and are recruited from the country's universities. The GDS gives them in-work experience while they are attached to various sections of the mine on a two months rotation basis. The scheme's sponsors expect graduate recruits to gain more knowledge by developing on-the-job skills and also to contribute ideas to the departments. The two year duration of the scheme is also a sufficient period for management to identify the talented graduates among them for further career development. GDS is part of the company's succession plan and graduates understudy mostly senior expatriates in their jobs. So far sixty eight per cent of the senior jobs have been localised in part through the operation of the GDS (TokTedi, 1994:10).

Table 5: Figures for the 10 year period between 1984 and 1994 on OTML based or supported training (skill formation).
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Notes:
There are several points to be noted from the above table. The data for 1984 to 1994 gives total persons identified over these years, involved in skills formation exercises that were either OTML based or OTML supported. However the data do not provide figures for completions of discrete programs for training. Nor does it allow identification of numbers of persons involved in multiple types of training. This aggregated data would need to be adjusted for workforce movements to give a clear picture of manpower training programs in Ok Tedi but information on this is not available.

However, what the table does show is an increase in total components of skills formation or training programs funded by OTML. It seems that only a small proportion of the national workforce was recruited with developed skills suited to the mine's operation because the great majority of the workforce were trained by OTML or under OTML auspices.

Similarly, Misima mine has also given substantial commitment to training which only varies in detail from the Ok Tedi and BCL models. The mine's training programs have included the usual on-the-job training for technical apprentices and in-house training for administrative staff. It also maintains a comprehensive sponsorship program for Mismians in secondary schools, colleges, and universities.

Localisation

Localisation, a process of replacing the expatriates employed with nationals, is central to the employment policy in every mine operation in PNG. It is a government requirement that foreign mining and other companies coming to operate in PNG must have training and localisation programs planned in advance which then become a component of the terms for agreement of each project. The DLE has developed a document which classifies occupations to assist in standardising the nomenclature and description of workers in the labour force. This document is used in determining compliance with the conditions of the Employment of Non-Citizens Act. Work permits that detail the duties and responsibilities of an occupation are mandatory for expatriate labour.

When a project commences operation, a Training and Localisation Committee meets quarterly to assess the progress of localisation of the expatriate jobs by Papua New Guineans. The Committee is made up of a representative of the particular landowners association (who are host to the project), a representative from the provincial government, and includes a representative from the DLE who is usually the chairperson, along with several others from key government departments. The Training and Localisation Committees keep records of the expatriates who are employed in the country, regulate the employment of foreign personnel and ensure the continued training of Papua New Guineans for expatriate-held jobs. In 1994 there were 11 939 expatriate positions still to be localised, including jobs in mining. A success rate of 21 per cent localisation out of a total of 15 329 jobs held by expatriates was achieved in 1992 (Joel, 1994:80).

Influenced by economic inducements to substitute citizen labour services where unit labour costs are lower of overseas persons, and also by the demand to comply with government policies, mines have, in fact, had quite remarkable success in 'nationalising' the workforce. The Bougainville mine in its last full working year (1988) had 80 per cent of its workforce localised out of a total of 3560 employees. In 1994, Ok Tedi, had a localisation rate of 89 per cent of its total workforce. For Misima in 1994, localisation was 78 per cent of the total operation workforce of 699 (see Table 6).

Table 6: Misima Mine's operation workforce showing nationals and expatriates in different occupational classification in 1992-1994. The percentage figures are for 1994.

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Notes

1. It is not surprising to find the six management positions still in the hands of expatriates. Because of the vast technical and practical experience these jobs requires, it will take several years for national workers to localisation to develop the necessary skills.
2. Rapid localisation has occurred in other professional, technical, and administrative areas. Much of this success has been due to the on-the-job training and the mine's apprenticeship system. However there are still some expatriates in jobs which again will require several years of experience to fill.
3. The number of apprentices in the 'other' category in the table numbered 16 under various areas of the mine in 1992. All of them were Misimans. New recruits doing apprenticeships in 1993 and 1994 were not mentioned in this report.

As Table 6 shows, like other PNG mines, Misima's management jobs also seem to belong exclusively to expatriates. No localisation has occurred in these six management jobs. However significant progress was made in other areas of the mine's operation where expatriates were usually found.

Although there is the general perception of satisfaction amongst the mine's workforces with the rate of localisation as a result of efficient training programs, there is still the perception held by officials of the mine's union, that localisation is still an acute issue which requires more resources (Interview, Frank). In fact dissatisfaction with localisation has the major cause of several strikes in the mines. In the union's view, the local workforce is 'segmented' while the government is concerned only with the success of the general trend to localisation. Hence, this puts less pressure on the mines' managements to get the few key management and technical positions localised. These complex and demanding jobs are mostly occupied by British, Australian and New Zealander expatriates. In 1995 Ok Tedi, Misima, and Porgera employed a total of 1500 expatriates, some 5 per cent of the workforce (PNGCMP, 1995:36). To the mine management, localisation is 'becoming an emotive issue' and the slow localisation occurring in this part of the workforce is interpreted as the result of the fact that it is going to take a while before Papua New Guineans possess the right 'attitude, loyalty and competence' required by these core jobs (Interview, Murray). This assertion was reflected when a Misima management representative claimed it was its 'managerial prerogative' to promote nationals on the basis of competence and not on seniority as the union demanded (MMWU Files, 1994). However, interviews and written comments suggest that as long as there are no nationals in the executive and key engineering and financial positions in the mines the localisation issue will ever be present (see chapter five for Porgera mine's handling of the localisation issue). At the same time there is visible motivation and commitment to involve Papua New Guineans in management on the part of the mining companies. This to some extent dampens down the hostile reactions and pressures from unions, government and landowners (Interview, Anderson).

Kerr et al.'s (1960) general model of the processes involved in the creation of an industrial workforce did not anticipate active community and political pressures on the structuring of a new workforce. The PNG experience demonstrates that these are relevant considerations and even Kerr et al.'s assumption that recruitment and development of human resources is easy to handle is questionable in the PNG mining context. Therefore their opinion of human resource availability has not been validated in PNG where workers have consisted of subsistence farmers to whom the concept of regular employment is unfamiliar. As illustrated by the three mines discussed the absence of effective government employment and education policies has allowed the mines to rely on their own initiatives to recruit and train workers. The evidence shows that mining companies in PNG have given training a high priority as a direct method of skill and commitment enhancement. Following this practice, current government training policy encourages the development of company training initiatives. The evidence also shows that the advancement of PNG tribesmen in Kerr et al.'s term has, as in the case of their example of the Middle East bedouins of a generation ago, largely been facilitated by transnational corporations with government assistance limited to tax offsets and planning inputs. My findings in general support Kerr et al.'s model of labour force development but lends to support for Siddique's theory of state dominance in the labour market.

However, the evidence does point to the pluralistic nature of the PNG society where interest groups have an influential role in determining labour market issues. The landowners, because of their traditional ownership of the land where resources are located, can veto employment policies of developers if their participation is marginalised. The government and developers apparently acknowledge them as key players in determining not only employment opportunities but also in determining other tangible social and economic services to their communities. The evidence demonstrates that the local people enjoy an unprecedented upper hand in negotiating for their interests with mining companies - and have more influence than the government. This makes PNG an exception when contrasted with other developing countries such as Indonesia where employment and other issues are decided between the government and developers, totally excluding any participation from local groups (Robinson, 1991:91-107).

Summary

This chapter discussed issues in labour market and employment in PNG mining. The potential for this sector to create employment is small but significant in a country where the near entire population subsist on communal agriculture. There seems to be a general trend for new mines in PNG to be faced with the ever formidable problem of finding sufficient local personnel who possess the right technical and professional credentials for mine work. This is not unique to the country as other mining developing countries face similar problems on various levels. In PNG's case it is a product of past legacies and current government policies. But what is specific to PNG mining is the excessive expectations and demands which are placed on foreign companies. In the eyes of Papua New Guinean citizens, mining companies such as BHP are seen as employment generating entities which have arrived to do justice to the landowners, unemployed people and government policies. Given the PNG situation, mining companies are indeed carrying most of the responsibility of training the national workforce for mine operations and localising expatriate jobs.

However, at the time of writing, the prospects for future localisation are mixed. Assuming a resolution of the conflict on Bougainville and assuming that the giant mine reopens, there will be a serious dislocation in the mining sector labour market. The workforce, which in 1989 exceeded 3100, was less than 18 per cent expatriate and would, even if scaled down in terms of manpower, require more skilled personnel that the country could possibly provide. For a taste of what is to come there is already signs of a scramble for the limited available skilled manpower between Lihir gold mine and other projects in the country. Because of the issues mentioned and because all mines in the country are private sector enterprises, there is continuous pressure on them to be efficient and profitable. The industry is constantly at the forefront of new technology and to remain profitable it must train for its own requirements, especially in the PNG situation. The product of the technical and vocational school system in the country must meet basic and minimal criteria. If the expectation is that expatriate labour should be reduced, then the manner and means by which such a reduction can be achieved is in need of early and urgent attention by the PNG government.

Further, the evidence from PNG would indicate that the workforce and the community it is drawn from do not act in the more or less passive manner assumed by Kerr et al. and Siddique. Rather, the workforce, largely because of its unique landowning power, has been able to influence development and associated human resource decisions by the

   Benedict Y. Imbun - UPNG Press 2000

Authorization has been given by the author to reprint the following sections of this book on PNGBUAI.COM web site:

• Introduction
• Chapter 4:  Labour Market in PNG Mining
  • Part 1
  • Part 2
• Chapter 5 :  Employment and Training at Porgera Mine
• Chapter 7 :  Attitudes and Perceptions in a Multicultural Environment: The Workers at Porgera Mine
• Chapter 8 |  Conclusion of Book

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