‘Interfering ministers scare off investors’
Analysts criticise Gordhan and Mantashe over interference in Eskom and Impala Platinum labour disputes
The government runs the risk of turning away investors and creating more uncertainty for business by intervening in labour-related disputes. This is according to labour and economy experts, who say the “interference” by ministers, as illustrated in the current wage talks at Eskom and retrenchment plans of Impala Platinum, was creating an unhealthy collective bargaining environment.
The government runs the risk of turning away investors and creating more uncertainty for business by intervening in labour-related disputes.
This is according to labour and economy experts, who say the “interference” by ministers, as illustrated in the current wage talks at Eskom and retrenchment plans of Impala Platinum, was creating an unhealthy collective bargaining environment.
During this winter’s strike season — a period characterised by wage negotiations in various sectors — trade unions have been heavily reliant on government intervention in the event of deadlock with employers.
In June, public enterprises minister Pravin Gordhan resolved an impasse in the Eskom wage negotiations after accusing the state-owned company of acting in bad faith by offering workers a 0% wage increase, and insisted they should improve it.
Two months later, Eskom is on the verge of signing a wage agreement with unions based on an above-inflation increase of 7.5% for 2018 and 7% for 2019 and 2020. The deal also comes with a R10,000 after-tax, oneoff payment for employees at the cash-strapped power utility.
However, Gordhan has been asked to intervene again after a new dispute arose over Eskom’s decision to charge employers for taking part in protests as the negotiations dragged on.
On Thursday the company’s bonds fell, indicating investors’ increasing nervousness about its ability to repay its debt as the labour crisis drags on.
The yield, which moves inversely to the price, increased 15 basis points on Thursday to its highest level since August 2.
Eskom has about R350bn of debt guaranteed by the government, making it one of the major risks for SA’s finances and credit ratings. Labour analyst Tony Healy said Gordhan should have never got involved in the talks as he “emboldened” labour at the expense of Eskom.
The National Union of Metalworkers of SA (Numsa) warned of a looming strike at Eskom if management and the government did not withdraw charges against its members and a meeting with Gordhan scheduled for Monday did not yield ideal outcomes.
Economist Mike Schussler said the involvement of ministers in negotiations made it difficult for business to work under such conditions. “When you are making losses, that is not something you can continue doing.… I don’t think Gordhan should have gotten involved; the minister should be involved as the absolute last resort.
“It’s unfortunate that unions seek interventions because these are the things that should be sorted out between labour and business,” Schussler said.
Harsh comments made by mineral resources minister Gwede Mantashe recently over Impala Platinum’s decision to retrench 13,000 workers over the next two years were also pointed out by the experts as harmful. He labelled the move as “unethical and reckless”.
The experts said politics were playing a bigger role in the labour relations matter ahead of the 2019 national elections.
“Business is under a lot of pressure … from the slow economy and then they have added pressure of ministers intervening in labour negotiations. [This] makes it ever more difficult and in the longer run businesses will take note of that when making decisions about business expansions .... It might affect investment levels,” Shcussler said.
Healy and Shcussler agreed that the government could engage with employers and labour privately and more diplomatically if the need arose.