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Eskom’s managers demand pay hike

2019-08-05 00:01

Power utility has warned that if there is no salary increase, there could be a strike and load shedding

While South Africans might have to cough up more taxes to keep Eskom from collapsing, its employees are fighting for higher salaries and bonuses.

Eskom has warned that a strike and load shedding might be possible later this year because no incentive bonuses were paid the in the previous financial year.

Last week Eskom announced a loss of more than R20 billion for the year ending March. Finance chief Calib Cassim highlighted high personnel costs as a sticking point.

City Press’ sister newspaper, Rapport, says Eskom’s senior managers are now taking the power utility to the Commission for Conciliation, Mediation and Arbitration (CCMA) because they received no salary increases.

There are between 180 and 200 managers in the group and they earn between R1.5 million and R3 million a year.

This is in sharp contrast to the average South African salary which, according to economist Mike Schüssler, is about R265 000 year.

They are asking for an increase of at least 4.7%, which Eskom granted to its middle management.

According to Deon Reyneke, deputy director of trade union Solidarity, this is expected to cost Eskom an additional amount of between R200 million and R300 million.

The middle management, which is believed to earn between R700 000 and R2 million a year, is apparently also unhappy that Eskom’s bargaining unit – made of up of lower-paid employees – got more than them, an increase of 7.5%.

They have declared a dispute and asked that they be included in the bargaining unit. There are about 6 500 personnel members in middle management, said Reyneke.

Solidarity is the majority union at that level.

The CCMA already decided in favour of the workers last year, but Eskom took the decision on review in the labour court.

It’s not clear what the financial effect on Eskom could be if the middle managers get their way.

The bargaining unit’s 30 000 members got a once-off, after-tax payment of R10 000 each last year when they agreed to a three-year agreement which would give them salary increases of 7.5% in the first year and 7% in the second and third year.

The middle management was excluded from this agreement.

Phakamani Hadebe, who stepped down as Eskom’s chief executive officer last week, earned the ire of the utility’s trade unions last year when he said there would be no salary increases for employees as a result of Eskom’s dismal financial situation.

Read: Treasury: State employees must take a 10% salary cut

Unions struck back. After protests – which Eskom called the “largest and most complex” incident the company had ever dealt with, and the three days following of consecutive load shedding – Public Enterprises Minister Pravin Gordhan intervened to get the parties around the negotiating table.

This led to a bargaining council settlement which, with increased overtime payment, led to a 13% increase in Eskom’s personnel costs in the financial year ending in March.

Eskom said the overtime payments skyrocketed as a result of the poor performance of its coal power stations.

In addition to money demands, unions are insisting that workers in Eskom’s power generation, transmission and distribution units should be allowed the right to strike.

These activities are classified as critical services and therefore they might not be allowed to participate in strikes.

Eskom said permitting strike action in these units would represent a substantial risk to the stability of the national grid, as was evident from the industrial action of June and July last year.

Schüssler said it was unfair that Eskom’s clients and taxpayers should bear the burden of the power utility’s woes solely.

He said inflation was at 4.5% and many workers in the private sector had not received increases that were commercially competitive.

Eskom should reduce its wage bill andought to stay away from above-inflation increases, otherwise it would have to cut staff, said Schüssler.

 Eskom logo
Eskom. Picture: Gianluigi Guercia, AFP

However, at the group’s year-end result presentation, Eskom’s chairperson, Jabu Mabuza, insisted that President Cyril Ramaphosa was opposed to retrenchments.

Eskom’s workforce decreased by 1 963 to 46 665 in the past year as a result of natural attrition.

It is considering early retirement and voluntary separation packages to reduce numbers further.

The target is 43 687 personnel members by 2022 and 41 151 by 2024.

Reyneke said the general perception that Eskom employees were paid too much was incorrect.

He said Eskom was in its present condition as a result of mistakes made by the government and Eskom paid its contractors far more than its employees got.

Eskom staff work under difficult circumstances and nobody receives overtime, he said.

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October 13 2019