Employees of troubled South African power company Eskom have been awarded a further 1.5% wage increase, backdated to July 2021.
The Commission for Conciliation, Mediation and Arbitration (CCMA) ruled on Thursday (29 September) that the increase comes on top of an additional 1.5% that was implemented unilaterally by Eskom last year.
According to News24, this 1.5% increase will add roughly R142 million to the annual wage bill.
The national power utility is currently failing, with rolling blackouts continuing for a record-long period, halting GDP growth and disrupting day-to-day life for many South Africans.
Eskom said that it will remain in Stage 4 load shedding until further notice as it scrambles to preserve the diesel it uses for its open cycle gas turbines. It added that it is facing technical issues at one of its power stations, resulting in three units being shut down, with four more units coming offline shortly.
Alongside a lack of generating capacity, the company is in serious debt over R400 billion. Government plans to take over a portion of Eskom’s debt to try and assist.
Labour protests in June sparked wage negotiations between some of South Africa’s largest unions and Eskom. Both the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (NUMSA) engaged in largely peaceful strikes.
However, stay-aways and some instances of intimidation did lead to a handful of power stations being significantly understaffed, forcing the power utility to introduce stage 6 load shedding. The strikes, amid Eskom’s other capacity issues, resulted in weeks of load shedding that contributed to a 0.6 percentage point decline in GDP for the quarter.
This was the first wage strike at the national power utility since 2018, where negotiations fell through as the company was deemed an essential service – but the protests led to electricity shortages. Following this, a three-year agreement was made with potential wage increases of 7.5% yearly.
NUM has welcomed the increase, saying that the CCMA works on a balance of probabilities, and in this case, a ruling in line with NUM was more probable than that of Eskom.
Global financial rating agency S&P Global warned that wage increases agreed between parties such as Eskom could set a dangerous precedent for other public-wage negotiations adding price pressures.
ALSO READ: Eskom, the dysfunctional power company wrecking South Africa’s economy
Price spiral
The South African Reserve Bank has warned that if inflationary forces do not cool, price setters will bump up prices, and wage demand will go up. This, in turn, could lead to a price spiral.
Rashad Cassim, the deputy governor of the Reserve Bank, said that labour costs are one of the fundamental driving factors that determine inflation, alongside the exchange rate, as they are the biggest inputs to business costs.
The Reserve Bank previously pointed out that if striking workers are successful in their wage negotiations and salary increases are not compensated for by productivity gains; inflation would continue to climb.
Source: News24
