WAGES: WHY ESKOM CAN’T FOLD THIS TIME

The raison d’être for trade unions is to fight for higher wages and better working conditions. That being the case, it shouldn’t come as a surprise that union leaders are prone to going to the negotiating table with unrealistic wage demands. It has almost become a badge of honour for them — the more ridiculous the demand, the better.

This is the situation playing out at Eskom. The utility is financially embarrassed, which is why it offered no pay increase to staff. But three unions — the National Union of Mineworkers, the National Union of Metalworkers of SA and Solidarity — are locked in a battle to extract annual salary increases of between 9% and 15% from Eskom.

The problem is that even the bottom of that range (9%) is double the inflation rate. But that doesn’t seem to bother the representatives of Eskom’s 47,658 employees. That Eskom does not have a cent to its name to afford these demands seems just as inconsequential to the unions.

Of course, it is true that Eskom’s staff by themselves aren’t to blame for the utility’s parlous state. There have been many strategic and operational blunders over the years, largely due to the inexperience of those in power. But the truly unforgivable damage has been caused by the deliberate and corrupt gutting of Eskom in recent years. The management teams that have whistled through the revolving Megawatt Park doors, and the government that installed them, must accept that they are the cause of this disaster.

Of course, given that Eskom became such a free-for-all environment, many employees believe they shouldn’t have to sacrifice their turn at the messy feeding trough. But that doesn’t change the financial reality of Eskom today.

The facts are that Eskom has for years been borrowing money to invest in infrastructure to keep the lights on. It has been borrowing to pay debt. And, most unnecessarily, it has also been borrowing money to pay salaries.

This is especially egregious given that the utility has been employing people it neither needs nor, at this point, can afford to employ. Its wage bill amounts to a fifth of its revenue.

The situation has become so dire that since December, Eskom has been living on 30-day revolving loans simply to pay those salaries.

The current spat between Eskom and the unions was inevitable, given that the utility was always going to have to face the music for its awful financial decisions. For the past decade, it has been luring professionals away from the private sector and paying exorbitant salaries.

This is the polar opposite of the state’s traditional role of being a training ground for young professionals, who got valuable experience that allowed them to then leap into the private sector.

As a result of that apprenticeship, many former Eskom employees went on to achieve great things in the private sector. Former finance director Mick Davis and Sasol joint-ceo Bongani Nqwababa come to mind. That was the Eskom of decades past, when it walked the developmental state walk.

So while Eskom’s staff can’t be blamed for its predicament now, this doesn’t change the financial reality. A 0% pay rise is obviously deeply painful, but would the unions prefer a steep reduction in staff numbers instead?

Employees need to grasp this reality and become part of the solution — a future in which union representatives occupy up to a third of the board seats of the company, crafting solutions for the sustainable employment of their members. Converting workers into partners in this way would go a long way to restore trust. This has been done elsewhere, so why not here?