South African Unions to Take Legal Path Before Eskom Strike

(Bloomberg) -- Unions at South Africa’s Eskom Holdings SOC Ltd. say they’ll pursue all legal options to resolve a deadlock over pay before calling a nationwide strike at the state-owned utility supplying most of the country’s electricity.

The labor groups want an urgent meeting with Eskom’s board, President Cyril Ramaphosa and Energy Minister Jeff Radebe, the National Union of Mineworkers and National Union of Metalworkers of South Africa said at a joint press conference Tuesday. The unions are planning a protest march on Thursday after cash-strapped Eskom insisted it can’t offer any pay increases.

The dispute has been referred to mediation and will result in a strike if a resolution isn’t reached, Numsa General Secretary Irvin Jim told reporters. If the labor groups make it to that stage, “there’s no going back,” he said.

"We have scheduled pickets during lunch time in different parts of the country where workers will demonstrate their disgust with Eskom for their provocative stance," the unions said. “Whilst we appreciate some of the challenges confronting Eskom, we demand that Eskom must come to the negotiation table with an intention to negotiate."

Yields on Eskom’s $1.25 billion of 2025 Eurobonds jumped by the most in four months, climbing 25 basis points to 7.8 percent, the highest since November 2016. The yield has climbed 75 basis points since the beginning of June, widening the premium over U.S. Treasuries to 476 basis points.

Read more: South African Power Utility Eskom Prepares for Pay Strike

The utility, which is working to improve its financial situation under a new board and chief executive officer, is also embroiled in a dispute with the energy regulator after being granted a 5 percent tariff increase this year instead of the 19.9 percent it asked for.

The utility said it’s preparing for contingency measures if a strike occurs.

Of Eskom’s 47,000 workers, the NUM represents 15,000 and Numsa more than 10,000, according to the unions. Both groups are calling for wage increases of 15 percent. Solidarity, another union at Eskom, has also declared a dispute, though it pledged not to disrupt the power grid.

--With assistance from Robert Brand.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Amanda Jordan

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