Financial Mail - - BETWEEN THE CHAINS - @Sikonathim [email protected] by Sikonathi Mantshantsha

he re­trench­ment of some se­nior ex­ec­u­tives at Eskom last month is a small first step to­wards re­duc­ing the or­gan­i­sa­tion’s bloated per­son­nel. While the sym­bolic im­por­tance of start­ing at the top can­not be over­stated, it could not have been the most dif­fi­cult pro­ject — se­nior ex­ec­u­tives will not be as mil­i­tant as their un­der­lings.

The real strug­gle for the util­ity’s man­age­ment will come when it tack­les the lower lev­els of the work­force, where over­staffing is the worst. Eskom em­ploy­ees have in the past shown they will stop at noth­ing to hold onto their jobs. They think lit­tle of sab­o­tag­ing the whole coun­try by de­stroy­ing elec­tric­ity in­fra­struc­ture to get their way. It works in their favour, of course, that in SA few peo­ple are ever held ac­count­able for any crime, in­clud­ing trea­son.

The next step should be to shrink the E-band man­age­ment, a cat­e­gory that num­bers about 300 gen­eral man­agers and se­nior gen­eral man­agers. It could be ar­gued that this level should lose about one third of its per­son­nel. Most were hired in the years since 2010, when the gov­ern­ment in­cluded “job cre­ation” in Eskom’s per­for­mance tar­gets.

They were re­cruited along with about 16,000 other staff, one-third of the cur­rent work­force, when the gov­ern­ment re­alised the pri­vate sec­tor was never go­ing to meet the ANC’S tar­get of cre­at­ing a mil­lion “job op­por­tu­ni­ties” dur­ing Ja­cob Zuma’s ten­ure as pres­i­dent.

Malusi Gi­gaba, as pub­lic en­ter­prises min­is­ter, ea­gerly took on the chal­lenge and in­structed Eskom to em­ploy more peo­ple. That the util­ity had no need for these new em­ploy­ees did not mat­ter. The 47,658 em­ploy­ees the util­ity now has on its pay­roll ex­clude those em­ployed by con­trac­tors build­ing the Medupi and Kusile power sta­tions. De­spite the surge in em­ployee num­bers, Eskom pro­duces only about 4%

Tmore elec­tric­ity than it did in 2006. Now that the util­ity has run out of cash to pay these em­ploy­ees, many of whom do lit­tle ap­par­ent work, the cur­rent man­age­ment team and board have no choice but to make cuts. This will be no mean feat. The gov­ern­ment will of course in­sist any ac­tion is best left un­til af­ter the gen­eral elec­tions.

The ur­gency of the need to tackle the bloat can­not be de­nied. Eskom’s out­stand­ing debt will top R500bn by March next year. On the bot­tom rung of junk sta­tus, it costs Eskom about R50bn a year just to ser­vice the in­ter­est on this. This is af­ter the pro­tec­tion of­fered by the gov­ern­ment guar­an­tees to lenders.

Re­duc­ing staff num­bers is the sin­gle big­gest re­quire­ment if Eskom is to be­gin the road to re­cov­ery. Nat­u­rally, im­proved op­er­at­ing per­for­mance and ef­fi­ciency, ac­com­pa­nied by lower lev­els of cor­rup­tion, would also go a long way to restor­ing Eskom to sus­tain­abil­ity. Should that hap­pen, as it needs to, the whole coun­try would reap the re­wards, start­ing with ap­pro­pri­ately priced elec­tric­ity that would help to lower the cost of do­ing busi­ness.

In many re­spects, much com­mend­able work has al­ready been done to fix the util­ity, in­clud­ing clean­ing up cor­po­rate gov­er­nance at the top and get­ting rid of many of those im­pli­cated in cor­rup­tion. But in­vestor con­fi­dence can only be fully re­stored once the work­force has been trimmed to a rea­son­able size.

Man­age­ment can­not af­ford to waste any more time. In the next few weeks it should ex­tend the sec­tion 189 process to the E-band man­agers, and grad­u­ally make its way down the lad­der.

The most re­sis­tance will be met at the unionised lev­els of em­ploy­ees. Good prepa­ra­tion on the part of man­age­ment ahead of that con­fronta­tion would go a long way to in­su­lat­ing the util­ity, and the rest of the coun­try, against sab­o­tage.

Re­duc­ing staff num­bers is the sin­gle big­gest re­quire­ment if Eskom is to be­gin the road to re­cov­ery

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