Business, Politics

Eskom vs unions: fear vs greed will determine if the lights stay on

By Andy Rice 1 July 2010

Eskom has dug in its heels and says it can’t improve on its current offer to workers threatening strike action. One of its unions says it’ll go on strike, another says it is looking at whether it can strike legally. Then it all becomes both very simple and frightfully complex: how many employees will risk going on an unprotected strike, how many will Eskom be able to get across the picket line, and how long will any unprotected strike last for? Because a small change in any of those numbers could mean the difference between a warm winter and blackouts.

Judging by brand-new CEO Brian Dames’ language, Eskom isn’t kidding – it won’t be improving on the wage package offer it has made to employees, at least not in any substantial regard.

“As South Africans we must put the country first,” Dames said at a media conference on Thursday, in one of many appeals to the patriotism and company loyalty of workers. “We believe that the offer we’ve tabled is fair and reasonable,” he said, shortly after noting the importance of not putting the company “into a position where it can not support its own operations”.

In other words, if Eskom’s management agrees to any increased offer, it would have to explain to the government why it is overpaying for labour and making itself even more bankrupt. And explain to labour where it suddenly found the extra money it previously said simply isn’t available, which would confirm union suspicions that they’re being played by callous and self-serving executives.

That leaves, by Eskom’s calculations, a R550 million per year gap between what it can pay and what unions are demanding. That’s a relatively small gap for a company the size of Eskom, not least of all because it has already discovered R450 million in new savings it has offered to put towards worker salaries. Or considering that government departments owe it more than R4.7 billion.

Eskom has some compelling arguments about how well it treats workers. Under the current proffered deal it won’t have any workers earning below R100,000 per year, it says, which isn’t bad considering it has menial, unskilled labourers on its books. Thanks to the new housing scheme it has negotiated, the company says, anyone on the payroll can afford a house worth more than R400,000, and a young engineer in his first job can buy a house worth more than R1 million as soon as the ink on his employment contract dries. The average salary across its employee base is north of R450,000.

But unions have been angered in equal measure by what they say is an arrogant approach from an employer that believes it is protected from any strikes because it provides essential services, and extravagant spending on top-level executives and directors. Executive committee members averaged just less than R3 million in salaries in the last financial year – before long-term incentives.

Eskom insists any strike by workers will be illegal, because there is no minimum-service agreement in place, which means even its gardeners are, by law, blocked from striking. The National Union of Mineworkers doesn’t seem to care; the National Union of Metalworkers of SA says it is looking into the legalities and is convinced there should be a legal mechanism to allow at least a partial strike; and Solidarity says it isn’t considering a strike.

If the unions do call an unprotected strike, Dames is hoping a stern demeanour will limit compliance. “We will take disciplinary actions against any workers that do strike,” he said on Thursday, and promised firm action with “no exceptions”, but diplomatically will not be “prejudging any specific outcomes”. Because rest assured that any firings will have the unions back out on strike in a heartbeat and will poison industrial relations for years, and back pay to make up for lost wages during an unpaid strike will certainly be part of any settlement to bring that strike to an end.

How scared will workers be of such disciplinary action, and will they be more scared of their striking colleagues? Will the police and army, which will be called in to protect power stations as national key points in the case of a strike, be able to ferry non-striking workers across picket lines? And will national government step in with extra money if a strike does actually go ahead?

We can only guess the answers, but at least we won’t have to wait long to find out. For all their protestations that this standoff is happening during the World Cup by pure happenstance, unions are well aware that a strike started before the end of the tournament will have much worse bite than one called after 11 July. Matters will come to a head within the next 10 days.

By Phillip de Wet

Read more about unions’ demands and the parastatal’s dire financial state.

Photo: Eskom’s new CEO, Brian Dames (The Daily Maverick)


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