Union leaders have signed a 7% across-the-board wage deal with Eskom, adding R1bn-plus to the salary bill of the cash-strapped state-owned company and ending a weeklong wildcat strike that deepened SA’s electricity supply crisis.
The pay hike agreement, which is above the headline inflation rate of 5.9% forecast by the Reserve Bank for 2022, will also see about 28,374 Eskom employees in the bargaining unit getting a R400 increase in the housing allowance.
It adds costs for Eskom, which survives off government bailouts, because its income is not enough to service its crippling R389bn debt pile. The increase can be seen as a setback for its turnaround plans, which include containing employee costs that have soared more than 60% over the past 10 years to about R33bn.
“I must actually put it on record that the offer that we signed today, we actually [can’t] afford as an organisation,” said Eskom HR executive Elsie Pule. “We need to make plans to find additional money to fund this agreement. The affect that it will have on our wage bill is in excess of a billion [rand].”
Pule was responding to Business Day’s questions after the National Union of Metalworkers of SA (Numsa), the National Union of Mineworkers (NUM) and Solidarity signed the year-long wage agreement for the majority of the 42,300-strong workforce.
The unions had previously rejected Eskom’s settlement offer for increases of 5.3%, 4.5% and 4% for bargaining unit employees, spread across different salary scales.
Eskom — which, according to data provider payscale.com, pays its employees an average of R473,873 a year — is in the middle of a sweeping operational overhaul that includes splitting into three units and containing costs as its recovery from a corruption frenzy during the state-capture project struggles to gain traction.
For SA businesses and society, who have been blighted by the worst power cuts since 2019, the wage deal raises the prospect of Eskom stabilising its operations after the wildcat strike compounded its ever-present problems of deteriorating, coal-fired power plants.
The offer that we signed, we actually [can’t] afford.
— said Eskom HR executive Elsie Pule
The strike, deemed illegal because electricity provision is an essential service, forced Eskom to impose stage 6 load-shedding, meaning some of its consumers went without electricity for up to six hours a day as the utility needed to take off 6,000MW of capacity to prevent a grid collapse.
But Pule said it would take an unspecified “bit of time” for Eskom to bring some of the units back to the grid, because the strike created a maintenance backlog at some plants whose generation capacity has been on a downward spiral for years.
“The disturbances from the unlawful [strike] action have exacerbated some of the work we needed to do on maintenance,” said Pule, adding that the wage deal “will contribute in stabilising our operations”.
Cost of living
Union leaders hailed the wage agreement as a victory for workers, whose finances have been squeezed by the rapidly rising cost of living.
They also chastised Eskom for the manner in which it handled the wage negotiations.
“If Eskom workers are an essential service then they must be treated with respect. They must be regarded as essential workers, they are important. It is them, and not the arrogance of our perceptions, that keep the lights on,” said Irvin Jim, general secretary of Numsa.
Helgard Cronjé, Solidarity’s deputy general secretary for the public sector, said: “I think this agreement will bring some sort of stability and economic recovery. Eskom treated these negotiations in a strange way and in a disrespectful manner towards employees [by] trying to abuse the fact that they are an essential service.”
Employee costs are the second-biggest expense for Eskom, which has received about R240bn in government bailouts since 2008.
In the 2021 fiscal year, it stumped up nearly R116bn to buy coal as well as electricity from independent power producers (IPPs) and to run diesel-power open-cycle gas turbines.
Update: July 5 2022
This article has been updated with new information throughout.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.