Cash-strapped Eskom likely to shed jobs

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Colleta Dewa

Johannesburg – South Africa’s power utility, Eskom, says job cuts cannot be ruled out to afford the 7.5% salary increase offer that it tabled to its unions.

Eskom spokesperson, Khulu Phasiwe, said though job cuts are not imminent, it could be the way out for the organisation to remain operational and sustain its costs.

"So far, and so far is a key word on this one, the issue of job cuts is not on the table. That's why we were offering no increases but because we are led by a responsive and responsible management, they have taken it upon themselves to see what else can be done to find this money from somewhere, even if we don't have it at the moment," said Phasiwe. 

Eskom has been locked in salary increase talks with its three unions - the National Union of Mineworkers, the National Union of Metalworkers of South Africa and Solidarity for more than a month.

Last week, the unions turned down a 7% offer and their revised demand was standing at 8%.

The unions are currently consulting with their members on whether to accept the tabled 7.5%.

Phasiwe was hopeful an agreement would be reached soon but the issue of bonuses seems to have stalled the progress.

"We first met on May 10, before the soccer World Cup, which has come and gone. We would like to start focusing on turning around this company."

The threat of load-shedding hangs over the economy until a deal is reached.

Workers downed tools after Eskom said it could not afford any pay increases.

Power cuts followed, for the first time since 2015.

 

Overstaffed

Analysts, however, say Eskom might be avoiding officially disclosing the issue of job cuts due to the sensitivity of the matter.

Eskom has already admitted that it is significantly overstaffed and somehow it has to bring its cost items under control.

A bloated workforce means high costs for a company struggling with cash flow.

The power utility has been running a loss for some time now raising eyebrows as to where they will get the money to increase the salaries.

The salary increase offer will raise Eskom's annual remuneration bill by more than R1.3 billion.

In its 2017 annual report, Eskom said it planned to reduce its overall headcount to 36,746 by 2021/22 from the current 47,658.

Phasiwe then said retrenchments were not on the cards. “We are not even talking about retrenchments,” Phasiwe said last year.

Eskom has been under pressure from, among others, the National Energy Regulator of South Africa to reduce its headcount to cut costs.

A 2016 World Bank Study of Utilities in Africa, which considered the staffing data for 36 countries, said Eskom was overstaffed by 27,500.

Eskom’s headcount was 47,658 in March last year compared to 47,978 during the corresponding period in 2016.

The figures included permanent staff and fixed-term contractors.

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