Carol Paton Writer at Large
Picture: REUTERS
Picture: REUTERS

Eskom announced on Wednesday that it would start legal processes to cut staff but that only executive management would be affected.

In a statement,the company said: “Despite efforts to curb expenditure, Eskom’s operating costs have continued to increase dramatically while output has remained largely unchanged.

“As a result, Eskom’s board of directors has decided to review the company’s organisational design to enhance operational and cost efficiencies. As such, Eskom’s board has approved a section 189 process for its executive structure.”

A section 189 process under the Labour Relations Act requires consulting  all affected people about staff restructuring.

But the National Union of Mineworkers (NUM), which represents workers as well as “some executives” hit back immediately in an angry statement saying that Eskom could not discuss retrenching one section of employees without union involvement.

The NUM said it was “flabbergasted” at the announcement as it had not received a section 189 notification.

“The NUM demand that this Thuma Mina board must consult within parameters of the law. Section 189 (1)  is categorically clear that if Eskom contemplates dismissing workers on operational requirements it must apply for section 189  for consultation with the NUM  for engagement in a meaningful consensus-seeking process in order to avoid or minimise dismissals,” said Paris Mashego, NUM energy sector co-ordinator.

Mashego said the union planned a national march in 10 days’ time to demand a meeting with management and a process of interventions on how to deal with retrenchments. The union insists that Eskom is not overstaffed.

A World Bank report published in 2016, which benchmarked Eskom against South Amercian electricity utilities, said Eskom was overstaffed by 66%.

Eskom chair Jabu Mabuza has since said that the power utility found that the number was closer to 33%, implying a staff reduction of a third at all levels.

Eskom is in deep financial trouble with falling sales, a declining ability to meet debt obligations and tariffs that are not cost-reflective. With debt of more than R350bn and rising, it faces an interest bill of R215bn over the next five years, which it is no longer able to service from operational income.

Stagnant demand and regulated prices have made it difficult for Eskom to increase revenue to sustainable level, leaving the option to cut costs.

But unions have indicated that they will fight any attempts by Eskom to cut staff costs or curtail wage growth. A wage negotiation mid-2018 turned ugly when workers sabotaged plants in response to a 0% wage offer. The sabotage caused quick capitulation by management, which later settled on 7.5% wage increase for 2018.