This paper analyses the ways in which ethnic identity and labour institutions shape favouritism and discrimination among workers. We conduct a lab experiment in the field with South African coal miners from various ethnic groups and with different trade union membership status. Our analysis suggests that union identity and ethnic identity are two social constructs that operate in a distinct and opposite fashion. Unionization acts as a factor of workers solidarity beyond the confine of union membership. Conversely, ethnicity operates as the linchpin through which discrimination among workers is infused not only between ethnic majority and minorities, but also within the majority group itself. We find that the widespread practice of subcontracting in the mining sector exacerbates ethnic discrimination among workers both between and within ethnic groupings.