Eskom, union meet in effort to avert strike

South Africa’s biggest union and state power firm Eskom voiced hope ahead of talks on Friday of averting a strike that could paralyse Africa’s biggest economy, a top producer of precious metals.

The threat of power cuts helped drive up prices of platinum and palladium this week and push the rand currency to a three-week low as investors fretted about the impact on a country suffering its first recession in 17 years.

South Africa is the world biggest platinum producer and also a major gold supplier. Platinum prices were down more than 1% on Friday.

”We received phones calls from Eskom management indicating a willingness to settle, they may have had a change of heart and want to discuss their offer further,” Paris Mashego, the National Union of Mineworker’s (NUM) chief negotiator at Eskom told Reuters.

”Our attitude is that we are not negotiating for a dispute, or a strike but for a settlement,” he said ahead of a meeting due to start at 08.00GMT.

The NUM and two other unions rejected Eskom’s latest offer of an 8% increase in pay, as well as a 9,5% increase that was proposed by mediators. Mashego said the unions also wanted more housing allowance.

”A 9,5% offer plus a housing allowance will make us settle, but if the house allowance is not forthcoming, we shall insist on a double digit increase,” Mashego said.

The NUM represents about 16 000 workers, about half of the employees at Eskom, which generates 95% of South Africa’s electricity and 45% of Africa’s.

Blackouts early last year temporarily crippled mine output and dented economic growth.

Eskom optimistic
Eskom spokesperson Andrew Etzinger told Reuters he was confident a deal could be reached to avoid a costly strike.

”We are going to engage this morning, and from our side we are confident of reaching an agreement,” he said.

Should the talks fail, an arbitrator from the mediating authority could be appointed to make a ruling based on presentations by both sides. Should that not be accepted by the unions, Eskom would be ready with contingency measures to cope with any possible strike action.

”We have contingency plans, but I don’t want to go there. We feel we can resolve this wage issue positively,” Etzinger said.

Another strike could hurt investor sentiment after a recent wave of industrial action that led to above-inflation settlements. The rand fell as much as 2,46% on Thursday, its biggest one-day decline since May 11.

A power strike could also be a challenge to President Jacob Zuma’s authority as he tries to lead South Africa through the recession and defuse anger in poor townships.

A drawn-out strike could hit shares and send precious metal prices soaring as happened in January last year when the country suffered a near-collapse of its power grid, analysts said.

The National Union of Metal Workers of South Africa (Numsa), which has about 5 000 workers at Eskom also said it would strike.

Under South African labour law, Eskom is classified as an essential service, prohibiting a large majority of its staff from striking. But the union has said it could defy the law because of the urgency of its members’ demands.

The Solidarity union, which represents about 8 000 workers at Eskom, has said a prolonged strike could affect power supply. — Reuters

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James Macharia
James Macharia works from Johannesburg via Nairobi. Reuters Bureau Chief Southern Africa, ex-deputy chief East Africa. My views. James Macharia has over 5484 followers on Twitter.

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