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Cosatu wants workers to have R104bn stake in Eskom

‘This will result in workers becoming shareholders in the power utility.’

The Congress of South African Trade Unions, the country’s biggest labour federation and a key ally of the ruling party, said it wants the R104 billion of Eskom’s debt held by the state pension fund manager to be converted into equity owned by workers.

Read: Eskom’s rescue plan must ‘not threaten financial sector stability’

The proposal, made in an opinion piece in Business Day newspaper by Cosatu’s General Secretary Bheki Ntshalintshali, is part of a deal the labour federation is trying to reach with business and government to rescue Eskom. The utility can’t supply sufficient power to the country and has R454 billion in debt.

“This will result in workers becoming shareholders in the power utility,” he said, without giving further details.

Eskom is seen as key to South Africa’s economic performance and the country’s ability to hold onto its last investment grade credit rating. Regular power cuts are hindering output in Africa’s most industrialised economy.

Ntshalintshali also recommended that at least 10% of all pension funds, whether private or government owned, be invested in government bonds geared toward social investment and employment creation.

“Workers believe that their retirement funds can contribute toward economic growth, socially desirable investments and employment creation,” he said.

The raising of the possibility of so-called prescribed assets is likely to anger investors who are opposed to having their investments dictated by government.

Read: Prescribed assets: Our problem is not money

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COMMENTS   49

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Workers believe ……?

I am a worker and nobody asked me what I believe.

We need someone with 3D vision like Margaret Thatcher had, not daft views from a useless group such as Cosatu. Heavens alone knows what their real intentions are.

I don’t think they themselves know what they’re doing

When comrades smell money, they want to own it, even if they don’t understand that that money translates into debt!

Now we understand why all :

SOE’s are bankrupt
90% of Municipalities are bankrupt
“Head Office” is bankrupt
Parastatals including “Head Office” are overstaffed and
The very soul of Civil Servants and Civil Society in general is bankrupt due to

BEE
Theft

Our lovable socialist comrades do not possess business acumen, hence the mess we’re in:
We need to understand their corrupt minds in order to understand their corrupt motives. Only then will we know why we are and will forever be in dire straits

The dark abyss isn’t looming, we’re already in it

Only strong leadership can lift us from the hole. But where to find such leadership when comrades fend for one another in a Socialist Regime?

This whole Cosatu proposal is utter rubbish. Here’s why.They want the PIC to donate one-eighth of their govt pension funding to an institution that is overstaffed by 66% and burning through money – YET THEY DO NOT WANT ANY JOB CUTS!! Cosatu probably realises that this money will disappear down the plughole – but they fondly think the government will make up the difference. But here’s the crunch. If you are a Cosatu member read this next part very, very carefully. How will the government make good the loss so GEPF members get their defined benefits? WILL THEY PRINT MORE MONEY? NO, THAT WILL CAUSE HYPER-INFLATION WHICH WILL DEVALUE THE PENSION BENEFITS ANYWAY. (Ask Zimbabwe and Venezuela). SO WHERE DOES THE GOVT GET THE MONEY THEN? FROM THE TAXPAYER??? A RECENT SARS REPORT CONCLUSIVELY SHOWED THAT 97% OF ALL INCOME TAX WAS PAID BY FEWER THAN 3 MILLION PEOPLE. THIS GROUP ALSO PAYS NEARLY ALL THE VAT, CORPORATE TAX, CAPITAL GAINS, DIVIDEND WITHOLDING TAX AND A HUNDRED OTHERS. COSATU – THERE SIMPLY IS NO MORE MONEY TO COME FROM THIS GROUP. GET IT – NONE!!! AND THIS GROUP IS SHRINKING AS MORE PEOPLE EMIGRATE. SO GOVT EMPLOYEES WILL, WILL, WILL LOSE THEIR PENSION MONEY. DO YOU UNDERSTAND, COSATU? OR ARE YOU SIMPLY TOO GREEDY AND STUPID???

Aye, much of COSATU are “wekka’s” in name only. They are actually sponging, incompetent and crooked loafers.

The unholy alliance of Cosatu and ANC have wrecked the economy. Now they are planning the next looting spree. Workers are not entitled to any equity nor is Cosatu since they were instrumental in destroying Eskom

Who would want equity in an insolvent entity? Idiots.

Invest where you work. Great idea. Buy your own products, protect your job!

ECONOMICS 201— How do you put money into a failing enterprise THAT WILL be having competition moving into the market THUS LOWERING COSTS TO THE PUBLIC?????????????????????????????????

So we should just hand over the assets of this entity to a small percentage off the population known as ’employees’, the assets of course being what was paid for and contributed to building up this empire by the entire population?

As an alternative to what Cosatu proposes, I propose that what of course should be done is to get all of the ’employees’ to instead assume responsibility for R104 billion of the debt and that they get a 50% cut in salary and that the amount of the reduced salary portion pays into a fund each month until the R104 billion bill is reduced to zero, at which time their salary goes back too normal. If they retire, die or leave before the entire debt is paid off, then they are liquidated or their estate sequestrated and whatever they have is taken from them and plowed into the debt. After all, the debt occurred on their watch, so they should pay it off, not the public at large.

Great idea . Hope they accept this business plan

Mr. N “something”

Whahaaaaahaaaa.

My pension you and your long fingered “friends” will never touch. Safely tucked away.

Your “backward” view is probably “unavoidable” and symptomatic of the current deplorable quality of leadership in this socialist / communist S…hole.

Its a lot easier going backwards than going forwards. Or is it down vs. up. Anyway. The end result is “EISH”. As usual.

Whahahaaaa.

Trump summed it up correctly

The general idea of the work force owning a piece of the company, is obviously something that has great potential, because it aligns incentives, and it is something we see across the globe. But, the particulars of the proposal as set out above is a bit silly.

You also cannot have an equity stake in Eskom (bought with your pensions) and then have the government or tax payer guarantee your pension. Anyways, lots of things to be worked out if they want to sensibly go down this path, but the general idea does make some sense.

Quite vital that those with private RA / pension money safeguard it in some way. There is a bit of time to plan and get that sorted, but it should be a high priority if someone hasn’t started to do that yet.

That is now BEE works. Nothing is funded, it is given.

No. ‘These people’ with shares will try to sell it immediately. ‘They’ only know one word and that is “cash”. ‘They’ do not understand what shares are.

Sell them the idea of a Defined Contribution pension …

The trade unions determining our economic future…….God help us!

Stop that! It’s silly. Very very silly.

Within the control-obsessed confines of the ANC-Labour doctrine (let’s call it Afri-Marxism) there aren’t many options available, because private capital (and capitalistic business principles such as efficiency of labour) are excluded from the options on the table.
They might as well convert this very-bad-idea-loan into shares. This will set the stage for an eventual revolution by the worker-shareholders when they lose patience with their taxes constantly increasing to repeatedly bail out their bad Eskom shares (a kind of socialist rights-issue, if you like, resulting in shareholder revolt).
And that is why the ANC government will prefer to keep it a loan instead of giving the workers shares (unless Cosatu stands its ground)….how much will has there been by the ANC to give the people Title-Deeds over the past 3 decades? Not much, because they want to keep the people weak and under their control….private ownership rights (perhaps including the collective “ownership” of their pension fund, even if it’s a defined benefit fund – and it’s underlying investments – give people a sense of personal responsibility & control over their destinies and this kind of Marxism prefers to centralize that control and hence, power

Whether the pensions go to Eskom or not, looted they will be and there will be no consequences…. Remember AYO… Ibal Surve… Ayoba-Ayoba’ed PIC money.

Bwahahahahahahaha!

The day they touch my pension money, I will withdraw all the pension money, will be prepared to pay the tax and reinvest the money into equities(etf’s). My risk profile will be better suited in ETF’s than in SOE’s.

They (ANC)already have you cornered on that one : U cannot withdraw all your Money : If one could everybody would do so . You can only up to a certain amt thereafter LAs for example limit you to max 17.5% withdrawal . Do that and your marginal tax rate is 45 % !!
Put another way , you too and all of us have been State Captured .
There is only one way out , namely Emigration, an thats exactly what the ANC want , as it mostly affects the “Colonialist Invaders” !

@ Dilip Patel, Why wait for that day… do it now. The writing is on the wall it’s “feit acompli”…

Do I understand correctly? Cosatu wants privatisation of Eskom? As long as it’s their people?

Should be interesting to see how and if Cosatu sink their members pension monies into a dying dinosaur will get their funds back and also how the Trade Union are going to get involved with the hoards of non payers of electricity

Simple, if consumers refuse to pay, they will just go on strike. If a politician says Eskom is too big to fail, then it shall be so.

So will Cosatu lead a march to Soweto to force consumers to pay up?

I agree with the union : the workers should step up and buy shares with their pensions. Private and public workers, not just Eskom workers. But the allocation must follow the same rules as per Multichoice, Sanlam, Old Mutual BEE deals

On second thought I think its a good idea that local pensions owned the Eskom debt… interest will be paid locally not to greedy overseas investors, one “caveat”though… The government must guarantee that anyone who even misappropriate a single cent of this money will be put in front of a firing squad at Nelson Mandela square and executed in broad daylight.

Oh no but what about their human rights? They must be assumed innocent until proven guilty. System is designed to fail.

If ZAR loses 10% pa who cares about 8% interest payments over the long term. We will be forced to become greedy foreign investors.

So the logic being followed is to take a portion of ALL member’s pension (not only Eskom employees) and buy shares for Eskom employees.
It will be difficult to buy shares per each employee, so a trust will be formed to invest/manage the investment. Only Cosatu management will be appointed to “manage” the trust.
History already showed where this road leads.

I would absolutely love this !!! Make a TV series. I would like to see the episode where they find out they do not have the money to pay themselves !!!!!!!!

It starts;

First, pensions will be raided. Then to prevent people from sending pensions overseas capital controls would be put in place. The market laws of rewarding performance and punishing under performance is being interfered with and giving the undeserving capital. Private enterprises suffer more.
The redistribution of land and capital property follows. The collapse of the buying power of the country citizens is observed…. all while saying undoing the the past and taking “corrective” measures.

When the Titanic is sinking, best place to be is on a life boat.

That’s a scary scenario you paint. Unfortunately, I think you’re right on all counts.
A “lifeboat” is having all your investments offshore except for pension savings, which I personally think are not tax efficient to cash in. I invested most of my lump sum offshore and it has more than double in the last 5 years.
For now with a Living Annuity you are able to invest 100% offshore in rand-denominated funds, within the constraints of the funds. However I expect government will restriction this in future.

Plan seems to be to pay off the bond holders with R105b using money from the PIC/GEPF.
Bond holders get paid R105b. What is the value of the equity that was purchased for R105b using someonelses money?
Zero. Will never be able to sell it on the market and will never pay a dividend. Brilliant.

What happens when Eskom is broke again after 6 months? Press play and watch this series again….

cusato, can shake, break-dance, strike & or seek false favour with their politically connected “mates”. Still needs trustees & workers approval! Or they meet in court & will be held liable for the losses, because it was never approved by those who’s money it actually is!

Can someone in financial services kindly explain how Eskom got to the debt level they currently have? If you borrow money from a bank, you need to provide some kind of equity against the loan. Which bank is simply going to increase your debt to insane levels, without extra equity to protect against loan default?

The State is the owner of Eskom, so how did they allow and get away with increasing Eskom debt to the current unsustainable level?

If Eskom was a privately owned business, the management would have been more competent, with far less debt and it would have been a much more fiscally viable business!!

Also not an economist or in finance. But I think these types of pension funds, GEPF, Eskom employees funds, private pension funds, etc… they are exactly the assets against which the loans to Eskom and by extension the state (standing surety) were done. They lenders weren’t stupid. They knew there are savings holed up in the country, trillions in savings backing Eskom’s loans which are merely in the billions. And we have no choice but to bail out Eskom SOMEHOW to prevent that our entire economy shuts down and makes everything worthless.

I like the concept of workers having an equity stake, that is a positive move but consider me confused. How do you take assets there to fund government employee pensions (from the PIC) and create equity for Eskom employees.

Good Question!…
How do you take assets of teachers, nurses, policemen and retired people and create equity for the bloated Eskom staff… Where is the logic there?

Good question. Someone in government please answer.

I support this idea of the workers to become shareholders in Eskom, as:

(i) The workers can look forward to high yielding interest on Eskom bonds.
(ii) …having an equity stake, it would allow workers to receive Eskom Dividends (…the first divvies ever?)

Can’t find fault with the above. It will really empower the people, right?

Union style economics, management and leadership.
Absolutely clueless. The problem is bad management, over employment and most importantly wholesale STEALING!!

But this pension fund theft-it is going to happen. The ANC cadres are out of money and a 10% haircut is not going to bother the members of the funds enough to riot…and it is such a juicy big pool of lovely cash to loot the ANC has to get its hands on it

The workers should have all there pension invested in eskom.. While we invest in solar panels and the USA dollar..
Fun to watch this. Gonna see if darwins theorys are woke or broke.

“Ntshalintshali also recommended that at least 10% of all pension funds, whether private or government owned, be invested in government bonds geared toward social investment and employment creation.”

My goodness…..this is just….wow. I am lost for words. I tell you these unions are the Achilles heel of this nation.

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