Eskom Strike Ends as South African Unions Sign Wage Deal

(Bloomberg) -- South Africa’s state-owned power utility, which generates most of the nation’s electricity, reached a pay deal with labor unions after strikes that crippled the grid.

The National Union of Mineworkers and National Union of Metalworkers of South Africa signed a three-year wage agreement backdated to July 1 with Eskom Holdings SOC Ltd. Pay will increase 7.5 percent in the first year and 7 percent in each subsequent year, and employees will get a one-time cash payment of 10,000 rand ($685) after tax, the unions said.

The negotiations started about three months ago, with the unprofitable utility saying it couldn’t afford increases and that it hadn’t achieved the threshold for bonuses. Eskom was forced to briefly introduce rolling blackouts in Africa’s most-industrialized economy when protesters blocked roads and attacked staff.

Eskom has been flagged by ratings companies as a key risk to South Africa’s economy as it grapples with issues from insipid electricity demand to unsustainable debt. It expects to release a long-term strategy plan for the business by the end of September.

Solidarity, a third union participating in the negotiations, said it also accepted the wage offer.

Some power stations were run by a fraction of the workers needed to do so during labor protests that resulted in sabotage, Thava Govender, Eskom’s group executive for generation, told lawmakers in Cape Town on Tuesday.

The unions dug in on the issues of wage increases, bonuses and finally amnesty for those who participated in the labor action, which is considered illegal because Eskom is an essential service. No workers will be dismissed as a result of the strike, said Livhuwani Mammburu, a spokesman for the National Union of Mineworkers.

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