Eskom raises wage offer to keep the home fires burning

Eskom on Friday increased its wage offer to unionised workers, trying to head off a strike that could cut power to Africa’s largest economy.

Hundreds of thousands of union workers have walked off the job in the past weeks, or are threatening to do so, seeking pay hikes that are double or triple the current 5% inflation rate in the mid-year bargaining session known locally as “strike season”.

Prolonged work stoppages that stretch into late August or power cuts at Eskom could put the brakes on growth for the economy, which is inching out of the global slowdown.

The National Union of Mineworkers (NUM), which represents about 40% of the workers at Eskom, said the utility had increased its pay offer to 7% from 5.5%. The union is demanding 16%.

“Next week there will be no talks. We will meet the week after to take the discussion forward,” said the NUM’s spokesperson, Lesiba Seshoka. Eskom confirmed the offer.

State-owned Eskom has faced political pressure to give in to workers from the ruling ANC, which wants to appease the unions that have supplied it with millions of votes.

But if Eskom gives into the NUM’s demands, it would mean wage and benefit increases of more than 35% over two years for its workers. Electricity workers already make an average of R25 773 a month in wages and benefits, more than double the average non-farm salary, according to government data.

Eskom plans steep increases in electricity prices to pay for the new power stations needed by the country’s energy-intensive mining sector, adding to inflationary pressure and taking more money out of middle class paychecks.

Its 2008 power crunch forced mines and smelters to shut for days and deterred new mining and manufacturing investment.

Economists have said well-above-inflation wage settlements hurt the country’s competitiveness and long-term outlook by driving up the costs for a labour force already more expensive than those in other emerging markets and far less efficient.

“The impact of the strikes is to reduce consumption, reduce production and affect economic growth detrimentally. They are inflationary and in the longer term they reduce employment,” said Rob Jeffery, a senior economist at Econometrix.

In a separate strike that has lasted about two weeks, the union that represents about 70 000 fuel, paper and chemical workers said talks were planned with employers offering 8% wage increases while they are seeking 11% to 13%.

Workers at global diamond mining giant De Beers were due to walk off the job on Friday, seeking 15% wage increases while De Beers is offering 7.5% and a one-off payment of R2 500.

“The impact across our four operating mines will not be known until next week,” De Beers spokesperson Tom Tweedy said.

Coal, gold and platinum miners have also threatened employers with strikes. — Reuters