Labour puts brakes on its Eskom rescue plan

• Disquiet grows among labour on the implications of using pension money to pay the utility’s debt

Trade union federation Cosatu has put the brakes on talks on a social compact to save Eskom as disquiet grows in organised labour about the implications of using pension money to pay down Eskom’s debt.

It is no longer expected that President Cyril Ramaphosa will announce the framework agreement in his state of the nation address on Thursday evening, but will report on progress made in talks over the past 10 days with business and labour.

Cosatu general secretary Bheki Ntshalintshali said on Tuesday there was a feeling among members that the federation should “move slowly and consult” to ensure there will be no confusion on what is being proposed.

Events have moved at speed since last Monday when the federation presented a proposal at Ramaphosa’s monthly meeting with business and labour leaders that R250bn of pension money managed by the Public Investment Corporation be used to pay down Eskom’s debt.

In return, Cosatu hoped to secure a commitment from the government that Eskom will not be privatised and that no worker will lose their job. The federation argued that pensioners would not lose out in the process as the Government Employees Pension Fund is a defined benefit fund, with benefits guaranteed by the government.

The proposal has caused anxiety in business and the investor community, who fear that if implemented it will open the door to prescribed assets

and undermine the good governance of the financial sector. The mechanism of prescribed assets, which was used by the apartheid government to raise funds for the state, entails that pension funds must invest a minimum amount in government debt. Most analysts believe that this leads to poor returns and an inefficient allocation of savings in the economy.

The proposal also provoked negative reaction from the Federation of Unions of SA, the second-biggest union federation in SA. Fedusa, with member unions that represent about 700,000 workers, is second in size only to Cosatu, whose affiliates have 1.8-million members. Like Cosatu, Fedusa is also represented in Nedlac. Fedusa said on Monday it had rejected the proposal, which was “a raid on public sector pension money”.

Fedusa president Masale Selematsela said: “We agree with the principle that Eskom needs to be helped but we don’t see it as feasible to use workers’ money to bail out Eskom. Workers are not happy when their money goes into a black hole.”

Cosatu parliamentary officer Matthew Parks, who has been central to the negotiations, said talks were continuing, but Cosatu needed more time for proper consultation with members as well as to ensure that Fedusa was on board.

“People’s fears are legitimate, as we have been in an environment where public resources have been looted. We also need to get the deal to a place where we can be guaranteed that Eskom will be properly run.”

Fears about the security of pensions have in the past led to substantial numbers of public servants resigning to cash in their pensions on the basis of incorrect information.

Vice-president of Business Unity SA Martin Kingston said the Cosatu proposal had served as a useful catalyst to get a discussion going about Eskom.

“I have no doubt that this will be acknowledged in the state of the nation address and that we are making progress in working with our social partners towards an aligned, integrated and holistic approach,” he said.

Ramaphosa’s spokesperson, Khusela Diko, did not respond to a request for comment.

R250bn the proposed amount of pension money managed by the Public Investment Corporation to be used to pay down Eskom’s debt