Eskom's 19.9% tariff hike will destroy jobs
1 November 2017
The COSATU affiliated-SA Clothing and Textile Workers’ Union (SACTWU) has made a submission at NERSA’s public hearings on Eskom’s tariff application for 2018/19, setting out why Eskom’s proposed 19.9% tariff increase should be rejected. The union’s research head, Etienne Vlok, told NERSA that Eskom’s proposed tariff hike will have a detrimental impact on workers’ job security and livelihoods.
The stagnant economy, including the slump in clothing retail sales and lower government demand due to tighter budgets, has had a negative impact on the stability of the clothing, textile, footwear and leather industry. This, combined with the looming credit downgrades and low economic growth forecasts, threaten thousands of jobs. A 19.9% increase will worsen matters significantly.
To quantify the impact of a 19.9% increase in tariffs, SACTWU surveyed the biggest and most important textile factories in South Africa. These factories reported that electricity constituted about 8% of their manufacturing costs in 2007. Following several sharp increases in electricity prices over the last decade, electricity now constitutes almost 14%. Should Eskom’s proposed 19.9% increase be granted, electricity will be more than 16% of total manufacturing costs. With electricity costs increasing much quicker than other costs, companies’ ability to pay wages and for inputs and supplies are squeezed.
A 19.9% increase in one year is so significant that it will have the following consequences: