Eskom’s new CEO takes first step to trim outsized wage bill

By offering voluntary severance packages to personnel aged 60 to 62.
ESKOM CEO Andre de Ruyter,Image: Moneyweb

Eskom’s new boss has taken a first step to reduce the indebted South African power utility’s bloated wage bill while avoiding a potential clash with labor unions.

Chief Executive Officer Andre de Ruyter, who took office at the start of the year, intends trimming Eskom management by offering voluntary severance packages to personnel aged 60 to 62. The utility said it has set aside R400 million for the plan, an allocation it expects to recoup through savings within a year.

Asking staff to leave of their own accord is a relatively easy measure that can be utilised to start trimming staff numbers, according to Andrew Levy, managing partner at Andrew Levy Employment, which advises companies on labor relations.

“It is really top heavy,” he said. “The voluntary package is a portent of things to come.”

Eskom has amassed R454 billion in debt, and isn’t generating enough income to cover its operating costs. While its headcount fell about 4% to 46,665 in its last financial year, it still has about a third more staff than it says it needs and wider job cuts have been resisted by labor unions.

De Ruyter embarked on extensive cost cutting during his previous tenure as CEO of packaging company Nampak Ltd,. disposing of loss-making units and reducing staff numbers to shore up the company’s balance sheet. While he’s ruled out firing Eskom workers, the utility does need to further reduce a workforce that’s expanded more than 23% in the past decade even as electricity sales volumes declined.

“Eskom cannot survive without massive staff cutbacks,” Levy said.

Applications for the voluntary packages will start in the third week of February, with exits planned by the end of April, and no critical skills will be lost in the process, according to Eskom. The voluntary severance won’t be offered to staff who don’t hold management posts.

The National Union of Mineworkers and the National Union of Metalworkers of South Africa, the two largest unions at Eskom, didn’t immediately respond to requests for comment.

© 2020 Bloomberg L.P.
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Get rid of the unwanted. The freeloaders. Don’t pay those close to retirement to leave. They also most probably are those that add value to Eskom with their experience.

This would not be the problem age group. Rather fire for non performance.

Paying people to leave 2 years early mmhhh. Although trimming management will be the best place as the top 200 in Eskom has grown to 500 in 20 years. So 300 managers at high salaries going will be huge.

Hope a lot of them are HR

Switching off a geyser for 2 hours will not save any energy because when the power returns the geyser will use twice as much power or as much as needed to recover any losses during the 2 hours. Likewise with your fridge computer, etc. Even your coffee machine and the restaurant only postpone operation till there is power. The only savings that you get is lights. Please explain how effective is load shedding during the day then? Are we load shedding for 2hours every day to save 1%? On a weekend when businesses are closed? If you plot load shedding during the past 5 years against decision points like NERSA reviews, state of the nation address, etc. You will see an interesting pattern, sadly continuing under the new leadership. All we as the public ask is honestly. I believe there are skills, albeit thin, and there are solutions, but those only thrive under honesty. Please be honest and transparent no matter the cost, and you will see it cost less than trying to fix problems under secrecy or by playing political games. See you cannot praise the good people at eskom that will be saving it if you do not point out the lazy people. Give even the lazy ones a chance because it is fair, but mark them. If they recover praise them, if they don’t, let them find a job that they can do elsewhere. The recipe of being uncompromislingly honest as provided for us in the Bible, is the only recipe that can save eskom and South Africa. Perhaps Eskom should show us by becoming a member of the south african unashamedly ethical organization and signing their commitment to being transparent and honest!

also ask the question, Hoe effective is load shedding? In my little village what does load shedding save between 1.00am and 3.30am? A few fridges?? Maybe 1000 watts.

What it does create is a security risk for all the old codgers living here.

I am exactly the target group, I started with Eskom in 1975 and worked myself up with years of experience into a middle management post where I can lead, train, guide, advise and manage people and technical challenges.
Personelly I think to shed this valuable group of people now at this critical stage is again a major mistake.
A soft target group of people with no union repercussions (which is the reason for targeting them), but serious technical repercussions.
But in his defense, the president instructed him No Job Losses!!
So his hands are already tied.

Good start to introduce voluntary severance packages to personnel aged 60 to 62.
However, incapable and incompetent employees as well as non-performers on all levels should be addressed as a matter of urgency!

End of comments.

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