First round of Eskom wage negotiations ends in stalemate

Numsa said it would not accept an inflation wage increase as it felt that it was fair given the economic climate since inflation was now at 7.1%. File photo

Numsa said it would not accept an inflation wage increase as it felt that it was fair given the economic climate since inflation was now at 7.1%. File photo

Published Apr 24, 2023


Eskom and workers’ unions will return to the wage negotiations table in two weeks after the first round of talks on Friday ended in a stalemate as both parties remain at odds.

If the deadlock were to reach a stage where a dispute is declared and workers go on a national strike, it would plunge the country into deeper power cuts on the back of an already constrained electricity supply.

Thousands of Eskom workers, represented by the National Union of Mineworkers (NUM), the National Union of Metalworkers of SA (Numsa) and Solidarity, on Friday rejected the power utility’s below-inflation 3.75% one-year wage rise for the 2023/24 financial year.

Inflation in South Africa remains sticky at 7.1% driven by rising food, transport and education costs, potentially triggering another interest rate hike as it remains above the SA Reserve Bank’s target range of 3-6%.

The Eskom workers’ unions are demanding up to 15% increases in wages; the reinstatement of performance bonuses; R7 000 housing allowances; standardised R1 000 cellphone allowances; and, that their medical aid shift to an 80% contribution by the employer.

Other demands include a R1 500 electricity allowance; a once-off R1 500 per annum essential worker or danger allowance; a performance bonus set at 25% of annual salary; R20 000 study benefit per child; and, six months of full-pay maternity leave and 14 days of paternity leave.

This is in spite of the government stepping in to bail out Eskom with a R254 billion debt-relief programme over the next three years to lessen its R400bn debt burden in its balance sheet.

NUM chief negotiator Olehile Kgware said Eskom rejected their demands and further said that the conditions of services must remain unchanged.

Kgware said all three unions have called on Eskom to sign a multi-year wage agreement of two years so that workers can have an opportunity to stabilise the power utility.

However, he said Eskom has refused to go for a multi-year wage agreement, saying the power utility was in dire financial constraints.

“Eskom claims that it cannot afford the demands that unions are making. We reject that claim outright,” Kgware said.

“They have not demonstrated that they cannot afford it because Eskom has done nothing to reduce the costs of independent power producers, coal costs and [the diesel costs for] open cycle gas turbine, which are sky-rocketing every year, sometimes at 15% or more.

“They do not have a problem with paying these service providers exorbitantly every year, but workers of the bargaining unit – whose benefits and packages as reflected in the annual financial reports have remained the same since 2016/17 – are told to accept peanuts.

“If Eskom is not willing to intervene on the escalating cost drivers of primary energy cost, they must not expect labour to reduce their demands.”

The next round of wage talks will begin on Monday, May 8, and negotiations will run over three rounds up to the end of that month.

Eskom has declined to make running commentary on wage negotiations until they are concluded and an agreement is reached.

Numsa said it would not accept an inflation wage increase as it felt that it was fair given the economic climate since inflation was now at 7.1%.

Numsa’s deputy general secretary Mbuso Ngubane said the outsourcing of workers at a number of power stations was not justifiable and was an attempt by Eskom to privatise the utility.

“Our members were last given an increase in December 2017; up to this far they have not been given an increase on the question of allowances, therefore we think that this time again... that 15% on allowances as an increase is mostly justifiable,” he said.

Ngubane said the question of a strike did not arise at the moment as they still had two more rounds of negotiations, but everything rested with the employer.

Solidarity’s general secretary Gideon du Plessis said Eskom could afford wage increases due to a notable improvement in electricity sales, reduced labour costs and income from independent power producers as reflected in its 2021/22 financial statements.

“The agreement to be two years, then the long-service award to be calculated as a percentage of the employer’s basic rate of pay at the moment is based on R20 000 cap, housing allowance to increase by 5%, all other allowances and benefits to increase at the same percentage as the final agreed salary increase,” Du Plessis said.

“We also requested that the unilateral change to conditions of employment be corrected in line with a specific ruling.”

Independent energy analyst Roger Lilley warned that the unions’ demands would have widespread implications on the whole economy and increase the cost of living for everyone.

“I think anybody asking for a 15% salary increase in today’s economy is out of touch with reality. I know that the cost of living has gone up, but by increasing the salaries at a state utility like that would be inflationary,” Lilley said.