Should Trapped Miners Be Paid?

Most people don’t expect to be paid when they’re not doing work. Sure, most people get paid during coffee breaks, and lucky folks get paid vacations. And some people get paid sick days. But what about when you’re not working for months on end? Does any employer have an obligation to pay you under those conditions? What about when you’re not working, but physically at work, for months on end?

That’s the issue faced by 33 miners trapped 2,300 feet below ground, in a collapsed Chilean mine.

Here’s the story, written by Nick Allen for the Daily Telegraph, but featured in the Ottawa Citizen: Trapped miners may not be paid

The 33 Chilean miners trapped underground may not be paid for months while rescuers try to reach them, leaving their families with no income.

The San Esteban company, which operates the mine, has said it has no money to pay wages and is not even taking part in the rescue.

It has suggested that it may go bankrupt and its licence has been suspended.

Evelyn Olmos, the leader of the miners’ union, called on Chile’s government to pay the workers’ wages from next month….

My initial impulse: yes, of course the miners deserve to get paid. Granted, they’re not exactly doing productive work, but that’s not their fault. Even though they’re not working, they are in fact still on the job. The problem, of course, is that the company seems financially incapable of paying them, not just unwilling. Legal means can be attempted, but if it’s really true that the company is bankrupt — well, you can’t get blood from a stone. (Note also that, for what it’s worth, the mine’s owners have asked the miners for forgiveness.)

So that leaves the government (i.e., the citizens) of Chile. Should they pay? Now, to be clear — and this is a crucial distinction — I’m not just asking whether it would be a good thing if the miners end up getting paid. I’m asking whether Chilean taxpayers have an obligation to pay them. I think the answer to that is less clear than the question of whether a financially-capable company would have an obligation to pay them. Now, this isn’t a public policy blog, it’s a business ethics blog, so I don’t often delve into what constitutes the morally-best decision for government. But it’s worth thinking about what principles might apply to this case not just from the point of view of government’s obligations to citizens in need, but from the point of view of government’s obligations to take up the slack when industry undertakes dangerous operations that can end up requiring considerable financial resources when things go wrong. Is government’s willingness to clean up the mess part of what lets mining companies put miners at unreasonable risk in the first place? Or should we think instead that the government’s willingness to help out is just part of the insurer-of-last-resort role that we want government to take on, and that allows all sorts of companies (responsible or otherwise) to be in business in the first place?

As a post-script, I should point out that the moral parallels between the Chilean mine rescue and the BP oil spill cleanup, in this regard, are striking.

—-
Also of interest, on the Research Ethics Blog:
Could Research be Done on the Trapped Miners?

20 comments so far

  1. Erik de Vries on

    Should the trapped workers be paid? I think so, for several reasons. These men are stressed enough by the accident and their confinement. Adding the worry of financial hardship and it’s effects on their families is an additional tragedy. It’s morally wrong to add to their suffering.
    Also, we ought to consider world public opinion. This is the sort of thing that really makes people angry, both at home and around the world. A boycott, even a mildly effective one, of Chilean goods by world citizens will cost a lot more than paying the miners and their families.
    Therefore, were I the President of the country, I would enact a campaign in which the local citizenry, in co-operation with local large business owners would gather funds to make up the wages for these men. Extra money raised could go to rescue efforts and to establish a fund for the protection of future such situations perhaps, or could be turned into a one-time civic improvement project. In this way, I would establish unity, send a clear message that my country looks after it’s own, and shine a positive light on businesses ranging from fresh fruit to wines to lumber to steel etc.

  2. Celesa Horvath on

    What an interesting question you raise, Chris.

    It seems to me that this is good example of why there perhaps should be greater emphasis on requiring industry/business to post bonds up front, when and where they engage in activity that could have a significant environmental and/or social impact. The value of the bond would be determined based on an analysis of risk and potential cost of responding to reasonable accidental scenarios (using information that is generated by such responses as we are seeing in the Gul and in Chile). This is already to done to some extent in some jurisdictions; for example, here in Alberta, all oil and gas companies are required to pay into the orphan well fund, which is intended to cover the costs of reclamation of wells that become abandoned through company bankruptcy (although, unfortunately, the fund is severely under-funded compared to the number of orphan wells that already exist).

    Posting the bond would be a requirement – a cost of business – before rights and permissions are granted to exploit a resource or undertake the potentially hazardous activity. Companies without such capacity would be precluded from engaging in any potentially hazardous activity. Companies would be reimbursed the money upon successful reclamation of the site (or some other appropriate success/closure measure). Companies with a demonstrably effective prevention and response strategy and low incidence occurrence could benefit from a discounted bond.

    You get the idea. Internalize the risk to the risk creator, preventing exactly this kind of situation – inability to pay – from occurring.

    Government’s role would be focused on establishing and administering a fair, transparent, and reasonable regulatory mechanism.

    There may still be circumstances where even this approach does not cover all of the costs of responding to an environmental or social impact, but the burden on the public is much reduced. But I think this is still a responsible way to go.

    • Chris MacDonald on

      Celesa:

      Thanks for your comment. The bond idea makes good sense.
      So, the next question then is, what about countries where government isn’t capable (or willing or interested) in insisting that companies post a bond? I agree that governments ought to think of themselves as obligated to do so. But if they don’t, then the question becomes one of whether companies have an obligation to take out adequate insurance.

      Chris.

  3. Celesa Horvath on

    I had to run out to a meeting before I had a chance to add a key point responding to your question more directly.
    In short, I DO think there is an obligation. If an individual, company, or other entity, through their action, creates a (social or environmental) risk that would otherwise not exist, they are responsible to manage that risk and to mitigate the consequences, particularly those affecting third parties, if an adverse effect comes to pass.
    If a government, on behalf of the public, fails to ensure that risk is carried by the risk-creator (i.e., by granting rights and permissions without some mechanism for internalizing the risk, as described in my previous comment), then the obligation must fall to government. This provides an impetus for government to proactively ensure the risk is managed by the risk-creator. It’s up to the public, in a democracy, to push government to do so.

  4. Celesa Horvath on

    I’m so scattered today, I missed your comment on my comment!
    I think companies should be obliged to take out such insurance. In the absence of a government-imposed requirement to do so, I expect it falls to shareholders to demand this of the companies in which they invest – which is perfectly aligned with their own interests in protecting their investment.

  5. Nicole Edge on

    The questions you’ve raised about “government’s obligations to take up the slack when industry undertakes dangerous operations that can end up requiring considerable financial resources when things go wrong.” brought to mind the handling of financial institutions. Celesa’s suggestions of a ‘bond’ can be linked to the debate over the bank “tax” proposal. Is the type of risk – personal physical risk and environmental risk in the mining industry – to be addressed differently by government and society than the risks that exist in the financial industry? Governments have bailed out the banks in many countries, so why not the mining company?

    But what about the downstream effect of the cost of the policy choice of a tax or a bond? A bond ties up cash and so has an implicit cost which then gets passed along in the goods and services extracted or produced. Is this acceptable depending on the type of good/service provided (“essential” vs “non-essential”)? Would it depend on the type of product mined (silver vs opals)? My credit card fees and bank transaction fees may increase yet again if the ‘bank tax’ proposal were to be adopted – at least I’m sure the argument to support the increase would be attempted. Charge a bond, and then implement a policy limiting the costs transferred to the end user… when does the policy-making end and what cost to implement and enforce it?

    One could argue that the royalties, land right sales and licensing fees that government gets from the extractive industry does in fact serve as a bond – and with that payment comes an obligation to mitigate the risks of industry failure. That said, I’m an Albertan and I’m sure the royalty cheques in Alberta don’t have that contractual agreement explicitly attached to them 🙂

    “Is government’s willingness to clean up the mess part of what lets mining companies put miners at unreasonable risk in the first place?” hmmm… financial institutions risk taking strategies and the results lately speak for themselves? What effective regulations have been put into place to hold that industry accountable for its actions?

    Another question may be: Is government’s willingness to achieve any means of economic growth part of what lets industries put people at unreasonable financial, emotional and physical risk? Mining companies are welcomed because they create jobs (which have unfortunately gotten the miners in the horrible place they’re in) and they buy ‘stuff’ in the local area which creates more jobs… and more tax revenues for the government. The alternative – no jobs, no GDP growth, no ‘stuff’ consumed. Back to Alberta – no wells drilled or tarsands mined, no employment, no re-election.

    The miners are people belonging to a community of people – it is that community’s responsbility to take care of their own. Be that community local, national or global. No one deserves to suffer.

  6. arfur on

    Wages are paid when someone does actual work rather than merely being on the job, so the miners do not deserve to be paid and the company is not obligated to do so. The obligation is to compensate the miners. This may entail, for example, sending nudie mags and HD video cams down to the miners, and providing food and bus fares to families ASAP. This could also involve paying money of which the sum may turn out to be more, equal or less than the miners’ wages. The point is that the company is obligated to do what is necessary to alleviate the pain and suffering of those involved, and later on to do what is necessary to restore, let’s say, the state of mind/happiness of the miners prior to their predicament so they can resume their lives. What is fair and proper compensation is a contentious issue, but I suspect that normal wages or a strictly monetary package isn’t nearly enough.

    Seeing the company is in no position to compensate, it is the government’s obligation given it’s failure in reigning in a bankrupt company that skirts safety guidelines. It’s fundamental obligation though is to properly regulate the business arena so as not to needlessly waste taxpayer dollars.

  7. Celesa Horvath on

    I appreciate and agree with arfur’s distinction between pay and compensation.

  8. Tomlyn on

    In addition to excellent comments above, I would point out that the government had a direct involvement in establishing safety standards for the mine, which it failed to enforce. That alone, I think, puts the government on the hook for dealing with the consequences of poor workplace safety.

  9. Chris on

    I’m no Chilean miner, but my mindset before accepting any job is to ensure I am adequately compensated for what I am doing and the inherent risks I am exposed to. As a result, if I was taking a job in a dangerous location, I would expect a premium over an equivalent job in a non-dangerous (or less dangerous) environment. If I was taking a job in a mine, I would expect to be paid more than a surface labourer, and expect it to be explicitly stated whether or not I got paid if trapped or stuck on the job site for any reason. I think the onus is on the company to state their policy upon hiring, and the employee to understand what they are signing up for.

    I think if a mining company wants to retain any workers at all, they should be paying salaries of trapped workers. This is similar to why companies ought to pay more than the minimum legal severance while laying off employees – it’s for the benefit of the remaining workforce, not the ones going out the door. If this company goes bankrupt and doesn’t pay trapped workers, the entire Chilean mining industry will be hit hard by this externality so I’m sure the other mining companies are lobbying the government to pay.

    I would imagine that many mining companies would not take out any wage insurance or bother worrying about paying workers. Most trapped can be rescued in days, at most weeks, and it would be trivial for a non-stressed company to pay for a few miners salaries for a few extra days. This is an unprecedented situation.

    If there were/is such a thing as wage insurance for trapped miners, wouldn’t it make sense to build it into part of an existing workers compensation insurance framework?

  10. Cristian Ducu on

    This type of companies have a special insurance account that it is activated whenever they have an accident. The miners will receive special payments for the period they spent in the mine, away from their families. The families of the dead miners will receive compensation payments. It is similar to the oil industry (production segment), although many companies, especially in forgotten places, try to elude the governmental vigilence. But Chile is not a forgotten place.

  11. Chris MacDonald on

    Cristian:

    From the news reports on this story, it looks like that’s not the case here. The company has said it is unable to pay, and has made no mention of insurance. Given the pressure the company is under, I would think that they would mention such insurance if they had it.

    Chris.

  12. […] issue.  Just the other day, I read in Chris MacDonald's ethics blog about the question of whether the Chilean miners can and should be compensated for the time they are trapped.  Or more accurately, whether the miners can be compensated at all given that the company they […]

  13. Alberto Guajardo on

    Estimados:

    Muchas gracias por mis compatriotas Chilenos, afectados por un derrumbe en una mina, que hoy tenemos a estos 33 mineros sumergidos a 800 metros de profundidad y a todo el país en su rescate.

    Quisiera dejar expresada que en Chile existen empresas que no cuentan con ningún respaldo para asegurar la vida de sus trabajadores, este es un problema debe involucrar al gobierno a dar respuesta a las familias de los mineros.

    Creo que es importante que ustedes revisen este caso como se aplica responsabilidad social en las empresas, gobierno y sociedad civil.

  14. Tamara on

    This is an interesting post. All companies should care about the ‘humane’ quotient while dealing with their employees and their clients. This is because being professional does not mean being devoid of all ‘humane’traits.

    The CSR approach is a wonderful gesture towards building long term relationships with clients and customers. It heralds a much awaited change in the overtly profit-oriented corporate arena.

    [link removed by request]

  15. […] also has an important business- and economic component. Last month, I blogged about whether the trapped miners ought to be paid, and by whom. But another issue is that the rescue effort itself is likely to be exceptionally […]

  16. Randy E. on

    I did a quick calc and each miner earned approximately $80,000 while trapped assuming they get paid $30/hr with time and 1/2 on Saturdays and weekdays > 8 and double-time for Sundays and weekdays >12. That number drops to around $50,000 at $20/hr.

  17. Chris MacDonald on

    Randy: your numbers may be a wee bit high.

    According to the NYT:

    “While a relatively high-paying profession here, a successful miner in Chile usually cannot expect much more than about $2,000 a month in salary.”

    http://www.nytimes.com/2010/10/15/world/americas/15chile.html

  18. […] Should Trapped Miners Be Paid? […]

  19. […] #4. Should Trapped Miners Be Paid? This one brought together hard questions about employee safety, social justice, and whether the government (i.e., the public) ought to clean up a corporation’s mess when that corporation is unable to do so. […]


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