Labour unions are gearing up for start of wage bargaining talks with Eskom, in what is set to be a highly charged process at a time when the power utility is implementing its turnaround plan aimed at stabilising its finances.

The negotiations, set down for 12 days from 4 May, would seek to find a new wage agreement, to replace the three-year package signed in 2018 with the National Union of Mineworkers (NUM), National Union of Metalworkers of South Africa (Numsa) and Solidarity. Back then, Eskom had initially said it could not afford increases, but the parties later settled for a 7% pay raise.

Eskom has not turned the corner as far as its balance sheet is concerned, but unions are unlikely to give the company an easy pass.

The NUM, which is the majority union at Eskom, goes into the talks with a 15% wage increase demand for its members, and wants the power utility to address what it calls an "apartheid wage gap" - which the union claims is skewed towards white employees.

A battery of allowance increases, such as a housing allowance which they want to see rise from R3 500 to R7 000, are among the demands. The union is benchmarking the allowance against what is being offered by mining companies. In motivating for the increase, they say Eskom power plants are located in remote areas, forcing the employees seek alternative accommodation.

The union has, to date, shown little sympathy for Eskom's financial challenges and blames "poor decision making" by management and the entity's sole shareholder, the government for the utility's ongoing woes.

Another sore point for the union, which has led to financial drainage, is "the parasitic relationship between Eskom and the IPPs". The NUM has been a longstanding critic of independent power producers, which are being used to supplement Eskom's power generation.

Unaffordable

Economist Peter Attard Montalto has warned that Eskom cannot absorb worker demands, and anything above a zero increase would be financed by the taxpayers and the fiscus. 

Eskom's outstanding debt as at 30 September 2020 stood at R463.7-billion, up from R454.2-billion in September 2019, and reported a R20.5-billion net loss in the full 2020 financial year. In the meantime, operational challenges at power stations are not abating, and the menacing power outages are still to be expected, while the company implements its turnaround programme and maintenance of infrastructure.

"The company can't really afford anything above inflation and has a liquidity problem whereby any tariff increases that would be awarded can take two to three years to come through, so the fiscus would have to stand in in the interim," Attard Montalto said.

Inflation currently stands at 2.9%, below the 3% to 6% band target set by the SA Reserve Bank, but the NUM points at the higher cost of living which impacting the livelihoods of the working class, such as food prices, transports costs and electricity.

Attard Montalto warned that Eskom should be clear with unions that if they want 15%, then they can accept a 15% cut in the workforce. He acknowledged that cutting the worker number would not be an easy thing to do.

National Treasury in the 2019 budget allocated R69-billion for Eskom to be utilised over a three-year period to help the utility reduce debt. As part of addressing its financial challenges, the power utility has embarked on drive of recovering monies owed to it, including the debt owed by municipalities and funds that were wrongfully paid to service providers.

Solidarity has put on the table a 9.5% salary increase, which it says will be "fair and just" - as well as a work-from-home allowance of R1 000.

The union said it based its demand on "researched the trends over the past years ... history within Eskom pertaining to wage increase, projections in the labour market".

The talks will start at from 4 to 7 May and resume from 17 to 20 May, with the final set between 31 May and 3 June, and Eskom says it expects the parties to "engage in good faith, and be cognisant of the operational and financial challenges facing the organisation".

The NUM believes that its demands are "reasonable and achievable".

"The company is doing well in recovering all the monies that were stolen. That money is the labour of our members. Our members deserve a share from that money," according to the union.

A repeat of the 2018 standoff between the unions and Eskom would have negative consequences. Disgruntled workers had staged pickets at power stations which disrupted coal deliveries, prompting Public Enterprises Minister Pravin Gordhan to intervene.

Back then, NUM and Numsa members were calling for a 15% wage hike, while Solidarity called for a 9% increment. The parties later settled for a 7% increase.