Eskom raises wage hike offer to 4.5% from 3.75%, unions will be seeing red

Eskom had the unions seeing red at the last round of talks when it did not budge on its initial offer of a 3.75% wage increase. Its latest offer is sure to have the three unions — Solidarity, the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (Numsa) — still regarding the SOE’s management through various shades of crimson. 

The latest union demands on record ranged from that of Solidarity, which represents mostly skilled workers and supervisors, of CPI plus 3%. The last CPI read in March was 7.1%. NUM reduced its demand to 12% from 15% initially, while Numsa stuck to 15%.

The talks come as winter sets in and the rotating power cuts that are slashing economic growth, fuelling inflation and stirring the blazing embers of social unrest look set to worsen with stage 8 looming. The last thing this economy needs now is a repeat of last year’s protests and sporadic unprotected walkouts by Eskom employees who have long been at loggerheads with management.

Last year the dust settled when Eskom agreed to a 7% wage increase for one year.  

Eskom has maintained that it cannot now afford increases that match or exceed inflation even in the wake of its debt relief package. Unions for their part have pointed to money lost to alleged corruption and what they see as questionable (read costly) contracts for contractors, and hold that public perceptions that their members at Eskom are overpaid are overblown. 

The unions also hold that labour costs are far from Eskom’s biggest burden.

“Primary energy costs account for 70% of Eskom’s operational expenditure and it is increasing year on year by more than 15%, while the bargaining unit salary cost which accounts for an average 8% of Eskom’s operational costs, have remained almost the same, which is why we say they can comfortably meet our demands,” Numsa’s Irvin Jim said in a statement on Monday. 

Eskom employees — by Daily Maverick’s calculations, based on answers provided by the utility to unions — have an average total monthly package of about R64,000 a month, but that includes everything and 9% of those costs are for overtime. 

The average basic wage or salary is closer to R40,000 a month. The average monthly nominal salary in South Africa according to BankservAfrica’s Five-year Review of Take-home Pay and Private Pensions amounted to R15,438 in February 2023. And salary increases have not kept pace with inflation.

Read more in Daily Maverick: Five-year review confirms salaries have not kept pace with inflation – economic growth likely to stagnate

So Eskom employees appear to be making close to three times the national average but unions say that conceals wide pay disparities within the utility and many of its employees are high skilled with crucial tasks such as ensuring that the grid does not collapse. 

Read more in Daily Maverick: Solidarity boss slams public perception that Eskom employees are overpaid

It’s a sticky situation all around. Eskom’s business model sucks, it is hardly flush with cash, and it does clearly have governance and corruption issues. Meanwhile, many of its employees have several dependants whose ranks are probably swelling in this grim economy at a time when food inflation has raced to 14-year highs of over 14%. 

The setting for Tuesday’s talks is a cold and grey one in Gauteng. That is sadly appropriate. DM