The cost of primary energy accounts for 70% of Eskoms operational costs compared to 8% cost of workers’ wages which means Eskom can afford workers wage demands

22 May 2023

The National Union of Metalworkers of South Africa (NUMSA) will be meeting with the Eskom management as part of the Centralized Bargaining Forum (CBF) of the entity, for the third round of wage talks this week taking place from Tuesday to Thursday the 25th of May this week.

In the last round of wage talks the Eskom Exco presented financials for 2023/24. The finances presented demonstrate that Eskom can definitely afford to pay workers demands because they are not doing anything to intervene in the biggest cost drivers, which are the Primary Energy costs which have ballooned from R83 billion, in the 2017 financial year, to R155 billion in the 2023 financial year.

Eskom budgeted a further increase of almost R30bn for this financial year which will see Primary energy costs skyrocket to R184bn by the end of this financial year. Primary energy costs accounts for 70% of Eskom’s operational expenditure and it is increasing year on year by more than 15%, while the bargaining unit salary cost which accounts for an average 8% of Eskom’s operational costs, have remained almost the same, which is why we say they can comfortably meet our demands.

Given the current prevailing circumstances, it is likely that the diesel budget will be exhausted in the first 6 months of the financial year, and as such the Eskom board and executive will want to revise their budget and take money that is initially budgeted for workers to fund diesel. Last financial year alone, (which ended 31 March 2023), the Eskom diesel budget was revised from R8 billion to R11 billion, and Eskom ended up spending R21 billion. This was against NERSA’s approved budget of R3.7 billion on diesel.

We also need to correct the false allegation made by the former GCEO of Eskom Andre De Ruyter when he said in his book, “Truth to Power”, that the wage increases demanded by workers at Eskom would cost the entity R1.6 billion a year extra. That is a lie. The 7% increase which was granted to workers at Eskom to a cost of only R553 million, and this covered all 27 300 bargaining unit employees. So effectively, there was a 3% increase in overall salary cost from the previous year, (2022/23 financial year), compared to the 112% increase in diesel expenditure in the same period.

Eskom’s projections show that the tariff increase of 18.65% tariff increase for 2023-2024 will translate into an additional R50bn in revenue. The government debt relief of R78 billion for the 2023/24 financial year as well as R66 billion for 2024/25 financial year, will assist Eskom to pay interest and debt repayments which effectively alleviates Eskom’s financial constraints. However, Eskom has not shifted from its original offer of 3.75% increase which is still way below our salary increase demand.

We reject the narrative from Eskom management that they cannot afford to improve on the wage proposal, it is clear they can afford to. Also, workers at Eskom have not had a meaningful increase in three years, because they keep taking from the workforce, in order to fund the bloated primary energy costs. We also demand that the issue of the income differentials, which Eskom agreed to address in 2017, must be implemented. The gap in some cases is as wide a R9000 per month and Eskom committed to fixing that problem.

NUMSA continues to reject the current Eskom offer as its still far from what we requested on salary increases. We have made submissions about how much petrol price increases are affecting workers and how they are struggling to survive. Secondly, the rising electricity costs, food prices, and the ever-increasing interest rate and the general cost of living increases, have a direct and substantial impact on workers’ salaries. We demand an above inflation increase for the simple reason that basic foodstuffs and daily expenses have gone up way beyond inflation in some cases. All these costs are making life expensive for ordinary workers and their families.

The Eskom management is demanding that unions must revise their demands, but it has not changed its offer. We reject this because we see it as nothing more than a delay tactic. It is clear that Eskom’s negotiating strategy is to provoke lengthy debates by making outrageous demands, so that we delay and we do not make progress with the wage talks. We are raising this issue now, because we do not want to be blamed for the delay in wage talks. We want to be on record, that it is Eskom, which is wasting valuable time, because it is does not want to see a speedy resolution to this matter.

We are calling on the Eskom executive management to once again, reshuffle the current Eskom negotiators who have consistently demonstrated a lack of urgency in concluding these wage talks. We are subjected to perpetual loadshedding, and we would like to focus on solving the energy crisis but we cannot if the Eskom management keeps delaying this process unnecessarily.

The third round of wage talks will commence Tuesday (23 May), until the 25th of May 2023.

Issued by Irvin Jim, NUMSA General Secretary, 22 May 2023