Eskom Calls Union Wage Demands Unaffordable in Tense Negotiation

Eskom Holdings SOC Ltd. said the South African state utility is unable to agree to certain union demands over wage increases and declined to make an offer on basic salary until labor groups respond.

The loss-making electricity provider “cannot afford” proposals such as an improvement in pay inequality, according to a May 4 letter reviewed by Bloomberg. A request by unions to raise worker housing allowance has “no justification” and the required funds aren’t available in any case, the company said.

Eskom has 464 billion rand ($32 billion) in debt and is the most prominent of the government-owned companies burdening state finances, while regularly resorting to power cuts to keep the grid from overloading. The utility bowed to pressure from labor in 2018 wage negotiations after strike action, agreeing to a one-time cash payment and annual increases of at least 7%.

The utility “is not at this stage in a position to table a possible offer in terms of a percentage increase to basic salary, as this is dependent on the union responses to the above,” it said.

An Eskom spokesman declined to comment further.

Eskom’s biggest two labor groups, The National Union of Metalworkers of South Africa and the National Union of Mineworkers, are seeking wage increases of 15%. Solidarity, a smaller group, wants 9.5% increases for its members.

“They must give us an offer,” said Livhuwani Mammburu, a spokesman for NUM.

The utility offered new proposals for wage increases and employment benefits but didn’t include a counteroffer on salary adjustments, according to Helgard Muller, a spokesman for Solidarity union.

“They have basically said their proposal in terms of the percentage salary increase will depend on the feedback from unions,” he said Tuesday. “They haven’t tabled a percentage increase, that will be tabled once the unions responds to those proposals.”

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