Eskom offers 3.75% pay hike, but the unions are demanding up to 15%
Eskom, the cash-strapped power utility relying on government bailouts to keep the lights on, has tabled a wage increase offer of 3.75% to trade unions demanding above-inflation increases of up to 15%.
The first round of wage talks got under way at the central bargaining forum on Wednesday. Talks are expected to continue until Friday as parties try to hammer out a pay hike deal for the utility’s employees.
The two largest unions at Eskom, the National Union of Mineworkers (NUM) and the National Union of Metalworkers of SA (Numsa), are demanding a 15% wage increase, while Solidarity is demanding an increase of 3% above the average inflation rate.
The country’s average inflation rate was 6.9% in 2022, with the Reserve Bank projecting it will ease to 6% for 2023. Numsa is demanding a two-year wage deal, while NUM and Solidarity want a single-term agreement.
Eskom has a debt of more than R420bn. The government has said that it will provide it with debt relief of R254bn over the next three years and will take over up to R70bn of the utility’s debt portfolio in 2025/26. Eskom will get advances of R78bn in 2023/24, R66bn in 2024/25 and R40bn in 2025/26.
In a presentation to parliament on Tuesday, the Treasury stressed that the debt relief could be used only to settle debt and interest payments. It said Eskom may not implement remuneration adjustments that “negatively affect its overall financial position and sustainability”.
Numsa’s other demands include a housing allowance of R1,175, 80% employer contribution to the medical scheme; and six months’ fully-paid maternity leave and 14 days paternity leave. It is also against the closure of coal-fired power stations.
Numsa national spokesperson Phakamile Hlubi-Majola said: “The only demand which Eskom responded to was to inform us that they want a oneyear agreement, and they are only offering [a] 3.75% increase.”
Eskom spokesperson Daphne Mokwena said: “Given our financial and operational position, we are of the view that our offer is reasonable. The trade unions’ demands are, in our view, not reflective of our financial and operational position.” As parties were still in negotiations, it was hoped they would “reach an amicable agreement”.
Hlubi-Majola lashed out at Eskom management for allegedly being ill-prepared for the talks. Hlubi-Majola also trained her guns on lies peddled by “right-wingers in the media” that Eskom workers “earn generous packages”.
She said independent power producers, coal costs and diesel open-cycle gas turbines were Eskom’s true cost drivers. These costs skyrocketed every year and were “wreaking havoc with Eskom’s balance sheet,” said Hlubi-Majola.
“The beneficiaries of these contracts are companies from the private sector. In comparison, workers’ wages and benefits have remained flat over the last six years.
“The total cost of the wage bill at Eskom, including the generous packages of the executive management has remained flat and has not exceeded R33bn since the 2016/17 financial year till financial year 2021/22,” said Hlubi-Majola.
In contrast, she said primary energy costs (coal, IPPs, diesel open-cycle gas turbines) “ballooned from R83bn in 2016/17 to R132bn in 2021/2022”. In 2021, NUM and Solidarity demanded pay hikes of 15% and 9% respectively, but Eskom rejected the unions’ demands and unilaterally implemented a 1.5% wage increase, citing a lack of funds.
In July 2022, the parties signed a 7% across-the-board wage deal, which added R1bn to Eskom’s salary bill, and ended a weeklong wildcat strike that deepened the electricity supply crisis.
The wage deal, which Eskom said was unaffordable, also caused about 28,374 Eskom employees in the bargaining unit to receive R400 increases in housing allowances.
IN COMPARISON, WORKERS’ WAGES AND BENEFITS HAVE REMAINED FLAT OVER THE LAST SIX YEARS
Phakamile Hlubi-Majola Numsa spokesperson