Eskom moves to cut executive staff

NUM prepares for battle over power utility’s restructuring process

Jabu Mabuza Eskom Chairman at the company's results presentation at the MegaWatt Park Offices in Sunninghill
Jabu Mabuza Eskom Chairman at the company's results presentation at the MegaWatt Park Offices in Sunninghill
Image: Freddy Mavunda © Financial Mail

Eskom is to start legal processes to cut staff, but only executive management would be affected, the state utility announced on Wednesday.

But the National Union of Mineworkers, which represents workers as well as “some executives” hit back immediately in an angry statement, saying that Eskom could not discuss retrenching one section of employees without union involvement.

The company said: “Despite efforts to curb expenditure, Eskom’s operating costs have continued to increase dramatically while output has remained largely unchanged.

“As a result, Eskom’s board of directors has decided to review the company’s organisational design to enhance operational and cost efficiencies.

“As such, Eskom’s board has approved a Section 189 process for its executive structure.”

A Section 189 process under the Labour Relations Act requires that all affected people be consulted over staff restructuring.

The NUM said it was flabbergasted that it had not received a Section 189 notification.

“The NUM [demands] that this thuma mina [‘send me’] board must consult within parameters of the law,” NUM energy sector co-ordinator Paris Mashego said.

“Section 189 (1) is categorically clear that if Eskom contemplates dismissing workers on operational requirements, it must apply for Section 189 for consultation with the NUM for engagement in a meaningful consensus-seeking process in order to avoid or minimise dismissals.”

Mashego said the NUM planned a national march in 10 days’ time to demand an audience with management.

The union insists that Eskom is not overstaffed.

A World Bank report published in 2016, which benchmarked Eskom against South American electricity utilities, found that Eskom was overstaffed by 66%.

Eskom chair Jabu Mabuza later said Eskom had found that the number was closer to 33%, implying a staff reduction of a third at all levels. Eskom is in deep financial trouble with falling sales and a declining ability to meet its debt obligations.

With debt of more than R350bn and rising, it faces an interest bill of R215bn over the next five years, which it is no longer able to service from operational income.

Stagnant demand and regulated prices have made it difficult for Eskom to increase revenue to a sustainable level, leaving the option to cut costs.

But unions have indicated that they will fight any attempts by Eskom to cut staff costs or curtail wage growth.

A wage negotiation midyear turned ugly when workers sabotaged plants in response to a 0% wage offer.

The sabotage caused quick capitulation by management which later settled on a 7.5% wage increase. -BusinessLIVE