Eskom’s Biggest Labor Union May Seek Pay Hikes of as Much as 10%

The biggest union at South Africa’s loss-making power utility is considering demanding pay increases of as much as 10% ahead of negotiations scheduled next month.

The National Union of Mineworkers, which has about 16,000 members at Eskom Holdings SOC Ltd., are still discussing an opening offer for the next three-year deal, according to Khangela Baloyi, the labor group’s energy sector coordinator. An 8% minimum raise would be reasonable to start with as salaries have been eroded by inflation, he said.

Eskom is struggling to meet electricity demand due to breakdowns from poorly maintained coal-fired plants and is simultaneously looking for a solution to address a debt pile of 464 billion rand ($31 billion). The utility bowed to pressure from labor in 2018 wage negotiations after strikes that crippled the grid, agreeing to a one-time cash payment and annual increases of at least 7%.

The National Union of Metalworkers of South Africa also hasn’t decided on demands, while it does have concerns about potential job losses as the utility begins a transition to green energy, according to spokeswoman Phakamile Hlubi. Eskom has plans to convert some plants into renewable energy facilities and install gas turbines.

The wage talks, to take place between April 20 and May 31, are “unpredictable” by nature, Eskom said, declining to speculate on the outcome. “We believe that parties are mature and will conduct themselves in a manner that will serve the interest of all employees, the organization and the country at large.”

South Africa’s Deputy President David Mabuza, who chairs the political task team on Eskom, recently told lawmakers that Eskom needed to significantly reduce its number of employees. “The amount of workers at Eskom has doubled in size since 2008 but the amount of energy that we are producing is getting less,” he said.

The utility’s problems go beyond its wage bill, including the high price paid for coal, Baloyi said. “You can reduce the staff to half, but it won’t resolve Eskom’s problems.”

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