South Africa’s state power utility signed a three-year pay deal with labor unions, averting the threat of a strike and further disruptions to the nation’s already fragile electricity supply.
(Bloomberg) — South Africa’s state power utility signed a three-year pay deal with labor unions, averting the threat of a strike and further disruptions to the nation’s already fragile electricity supply.
Eskom Holdings SOC Ltd. agreed to pay its workers 7% annual increases under the accord signed with the National Union of Metalworkers, the National Union of Minewokers and the Solidarity union. The labor groups initially demanded raises of as much as 15% and last month rejected the utility’s 5.3% offer. South Africa’s consumer inflation rate is currently 6.8%.
Africa’s most industrialized economy has been subjected to rolling blackouts, known locally as loadshedding, since 2008 because Eskom’s old and poorly maintained plants can’t keep pace with electricity demand. Generation from several power plants was interrupted after previous pay talks stalled, an eventuality the utility and government wanted to avoid.
“All of us have got our backs against the wall in that there are crippling rolling blackouts in the country that are sabotaging the economy, that are sabotaging jobs,” said Irvin Jim, the general secretary of the metalworkers’ union. The deal “is a strategic victory for workers,” he said.
Employees will also get a 7% increase in housing allowances and a once-off 10,000 rand ($548) payment in the second year of the deal.
The departure of Andre de Ruyter as Eskom’s chief executive officer in December helped smooth the path to reaching agreement, with the utility’s new management more accommodative of its staff’s needs, Jim said.
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