Cash-strapped power utility Eskom has refused to disclose the cost of its three-year pay deal it reached with unions last week, saying the total will depend on factors such as staff numbers.
“The total amount is confidential and Eskom cannot disclose it for various reasons. Among those is that the figures are dependent on the variable components of the deal, which includes but are limited to the number of employees at the time of implementation per period; utilisation of allowances during the period of the deal etc,” Eskom said in response to questions from Business Day on Monday.
Stanlib chief economist Kevin Lings said that it appeared the pay deal may help with stability, but warned it risked feeding into “further inflationary pressures”.
He said Eskom is watched closely. The pay deal “does feed expectations of similar increases in other institutions, [and] there is a risk this will perpetuate wage increases above inflation. I think it can lead to some perpetuations of wage pressure in the economy and risks keeping interest rates elevated for longer.”
Lings said the deal is “generous” and “it’s going to cost a significant amount of money [to implement]. How is it going to be funded? Eskom’s ability to fund itself is not good. This increases financial risk for Eskom, the government, and limits the ability for Eskom to spend money on other things such as rebuilding capacity within the organisation. It [the deal] does put a burden on the entity.”
The Treasury did not respond immediately to a request for comment.
Eskom signed a multiterm pay deal on Thursday that will see all nonmanagerial staff at the state-owned power utility get raises of 7% a year for three years. The deal has been hailed for bringing labour stability to Eskom’s operations.
The deal hammered out at the central bargaining forum (CBF) effective from July 1 to June 30 2026 was signed by Eskom management and the National Union of Metalworkers of SA (Numsa), the National Union of Mineworkers (NUM) and Solidarity.
It includes a 7% annual rise in housing allowances for the period of the agreement. Lowest-paid employees who are party to the central bargaining forum will get taxable payments of R10,000 for the first two years.
“The collective agreement will go a long way in stabilising our organisation by providing Eskom with sufficient space and time to collaboratively work together to urgently address our most pressing challenges,” Eskom acting group CEO Calib Cassim said last week.
“This is the first time in more than a decade that the parties have reached agreement in the [negotiating] room.”
As essential service workers, Eskom staff may not strike. But that did not stop them embarking on a wildcat pay strike that worsened the electricity supply crisis in July 2022.
Eskom management caved in to demands in this unlawful industrial action, and signed a 7% across-the-board pay deal that added R1bn to Eskom’s salary and wages bill.
Eskom has debt of more than R420bn, and the government committed to provide it with debt relief of R254bn over three years. The National Treasury has said one condition of the debt relief plan is that Eskom may not implement remuneration adjustments that “negatively affect its overall financial position and sustainability” over the three-year debt-relief period.
Unions said the conditions are “reckless”. NUM and Numsa, the two largest unions representing most of Eskom’s workforce estimated at 42,000, initially demanded raises of 15%, which they reduced to 11% and 12%, respectively.
Solidarity members demanded 3% more than the average inflation rate, which rose to 7.1% in March from 7% in February.
The cash-strapped power utility started with an initial offer of 3.75%, which it adjusted to 4.5%, and then 5.25%, but unions rejected these offers. The parties finally settled on 7% on Thursday.
“Numsa views this agreement as a victory for workers at Eskom who have been denied meaningful increases since the 2016/17 financial year. We are coming from a dark period where Eskom was led by the racist, clueless André de Ruyter who plunged the country into rolling blackouts, because of his refusal to drive quality maintenance at power stations,” said Numsa general secretary Irvin Jim.
“We are in the process of trying to recover and repair what was destroyed during [De Ruyter’s] tenure. At the same time, the same De Ruyter tried to collapse centralised bargaining by imposing a 1.5% increase on the workforce. But he refused to intervene on Eskom’s true cost drivers, namely, coal costs, REIPP’s [Renewable Independent Power Producer Programme] and diesel costs.
“He wanted workers to pay for Eskom’s financial challenges and used them as a scapegoat for his glaring failures to motivate workers, and to drive a programme to increase the Energy Availability Factor at the power utility.”
Jim said the pay deal was a “sign of an improvement in the relationship with Eskom”. The agreement brings “labour stability” as it will enable workers to focus on “quality maintenance, without interrupting that process with annual wage talks”.
NUM Eskom chief negotiator Olehile Kgware said the negotiation process “was never an easy route to travel. The route was bumpy with never-ending turbulences and the journey was indeed very tough. In most cases Eskom’s negotiating team was not rational and did not show any sense of urgency.”
Solidarity deputy general secretary Helgard Cronje said the pay deal was a “good agreement ... more or less in line with CPI [consumer price inflation]. Because it’s a three-year agreement, it creates stability within Eskom and an environment for workers to focus on ending load-shedding during these tough economic times.”
Update: June 19 2023
This article has been updated with new information.
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