Business
South Africa’s Eskom hikes pay offer to ward off strike
South Africa’s power utility Eskom on Friday increased its wage offer to unionised workers, trying to head off a strike that could cut power to Africa’s largest economy.
Hundreds of thousands of union workers have walked off the job in recent weeks, or are threatening to do so, seeking raises double or triple the current 5 percent inflation rate in the mid-year bargaining session known locally as “strike season”.
The strikes typically last up to a few weeks, slowing down production but causing minimal damage to the overall economy.
Prolonged work stoppages that stretch into late August or power cuts at Eskom could put the brakes on growth for an economy inching out of the global slowdown.
The National Union of Mineworkers (NUM), which represents about 40 percent of the workers at Eskom, said the utility had increased its pay offer to 7 percent from 5.5 percent. The union is demanding 16 percent.
“Next week there will be no talks. We will meet the week after to take the discussion forward,” NUM spokesman Lesiba Seshoka said. Eskom confirmed the offer.
State owned Eskom has faced political pressure to give in to workers from the ruling African National Congress, which is in an alliance with organised labour and wants to appease the ally that has supplied it with millions of votes.
But if Eskom gives into NUM demands, it would mean wage and benefit increases of more than 35 percent over two years for its workers. Electricity workers already make an average of US$3,800 a month in wages and benefits, more than double the average non farm salary, according to government data.
Eskom plans steep increases in electricity prices to pay for the new power stations needed by the country’s energy-intensive mining sector, adding to inflationary pressure and taking more money out of middle class paychecks.
Its 2008 power crunch forced mines and smelters to shut for days and deterred new mining and manufacturing investment.
Impact of Strike
Economists have said well above inflation wage settlements hurt the country’s competitiveness and long-term outlook by driving up the costs for a labour force already more expensive than those in other emerging markets and far less efficient.
“The impact of the strikes is to reduce consumption, reduce production and affect economic growth detrimentally. They are inflationary and in the longer term they reduce employment,” said Rob Jeffery, a senior economist at Econometrix.
In a separate strike that has lasted about two weeks, the union that represents about 70,000 fuel, paper and chemical workers said employers walked out of talks on Friday after the union lowered its demand to 9.5 percent from 13 percent.
Employers were insisting they could only afford an eight percent increase, said Simon Mofokeng, general secretary at the Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union (CEPPWAWU).
Mofokeng said employers insisted in wage negotiations on Friday their 8 percent offer was final. The union was waiting for a mediator to intervene, he added.
South African workers at global diamond mining giant De Beers began a strike on Friday, seeking 15 percent wage increases while De Beers is offering 7.5 percent and a one off payment of US$369.
“The impact across our four operating mines will not be known until next week,” De Beers spokesman Tom Tweedy said.
Unions representing thousands of coal miners served mining firms with a strike notice on Thursday and are expected to down tools starting on Monday.
Gold and platinum miners have also threatened employers with strikes.
Source: Reuters