Eskom offers workers 7% increase — Report

Eskom Holdings SOC Ltd., South Africa’s embattled power utility, is offering workers a 7% wage increase to end an impasse that plunged the continent’s most industrialized nation into its worst blackout since 2019.

The offer is for a year, according to people with knowledge of the matter.

The proposed pay rise is on a sliding scale with higher earners receiving slightly less, one of the people said, asking not to be identified because the matter isn’t public.

Eskom, which has 396 billion rand ($24.6 billion) of debt and survives on government bailouts, raised its offer to break a deadlock that led the utility to cut enough power to supply 4 million South African homes.

The stalled negotiations prompted workers to go on a rampage, torching homes of senior officials and blocking entry into power plants, stymieing electricity generation.

Eskom, which has 42,000 employees, had made an offer of an increase of as much as 5.3% before the call by unions to stay away from work.

The protests prompted Public Enterprises Minister Pravin Gordhan, who oversees the company and other state-owned groups, to brief the media where he showed photos of the violent attacks by workers.

The utility’s constrained financial situation means Eskom would “have to find savings somewhere else” in order to make a higher offer, Chief Executive Officer Andre de Ruyter said in a briefing on Tuesday.

Labor groups are expected to present the revised plan to members before negotiations resume on Friday.

The details of Eskom’s offer will be “made known” on that day, the company’s spokesperson Sikonathi Mantshantsha said in a text message.

The utility is still experiencing some disruptions, including at the Matla power station, but the situation has significantly improved, Mantshantsha said in an interview with the South African Broadcasting Corp.

Stage 6

The record level of rolling blackouts — so-called Stage 6 load shedding — sees the company removing 6,000 megawatts of demand.

Vodacom Group Ltd., South Africa’s biggest wireless operator, said its deploying back-up power options including batteries and generators, in order to keep customers connected during the outages.

“Towers are equipped with back-up batteries, however these have limited power and will eventually fail,” a company spokesperson said.

The National Union of Mineworkers and National Union of Metalworkers of South Africa, Eskom’s biggest labor groups, said in a statement late Tuesday that meetings with the company made “considerable progress in that negotiations have been able to break new ground with a new offer.”

The wage talks “will undoubtedly be watched closely by policy makers,” BNP Paribas senior economist Jeffrey Schultz said in an emailed note.

Including the central bank, “because of the threat of higher wage settlements into inflation, and the Treasury, which is currently in the throes of its own wage negotiation with unions that continue to demand 10% wage hikes,” he said.

Eskom’s unions wanted a 12% increase across the board. South African inflation rose to 6.5% in May, up from 5.9% the previous month.

Now read: Eskom under attack — Photos

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Eskom offers workers 7% increase — Report