Eskom, unions sign three-year deal for 7% wage hikes annually

When the third round of talks ended in late May, Eskom’s “final offer” was a 5.25% wage increase while the unions were still seeking hikes of as much as 12% - in short, poles apart. 

In the end, and despite massive labour resentment towards Eskom's management, all sides made significant moves. The result is a three-year deal signed on Thursday that will see annual wage increases of 7% over that timeframe. Consumer inflation in South Africa is currently running at 6.8%. 

“Our guys were very happy to accept the agreement,” a source at one of the unions told Business Maverick. 

Employees also get a once-off payment of R10,000 to all permanent employees employed in Task Grades T04-T13, and a 7% increase in their housing allowance. 

The state-run power utility is hardly flush with cash and had warned that it could not afford increases in line with inflation, so it will be of more than passing interest to see how this impacts its balance sheet. The unions for their part maintained that labour is far from Eskom's biggest cost and that its financial woes are largely a product of corruption and mismanagement. 

One thing the deal will helpfully secure is three years of labour stability at Eskom as it desperately tries to maintain its ageing fleet of coal-fired power plants which are at the heart of the rolling blackouts that are slashing economic growth and making life miserable. 

During last year’s wage talks that ended in a one-year agreement for a 7% wage hike across the board, protests and wildcat walk-outs disrupted Eskom's operations. 

Eskom also needs to procure new grid capacity from renewable and other sources and needs labour buy-in for plans to unbundle the SOE into three separate units — a measure that has faced resistance from unions. 

With the grim prospect of the power outages reaching stage 8 this winter, the potential for labour flare-ups at least has been nipped in the bud. 

In its statement on the settlement, the NUM said it had also noted and welcomed the improvement in the Eskom generation fleet. “We have observed that since the departure of the COO Jan Oberholzer there is a reduction in load shedding stages. The NUM is on record saying that the position of the COO was unnecessary, it was not informed by business need but accommodating an individual”.  DM