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How do the Eskom unions sleep at night?

Wage negotiations don’t bode well for turnaround.
A national strategic asset held to ransom, with acts of sabotage followed by generous increases and a hefty bonus for union members. Image: Shutterstock

Despite Eskom hovering on the brink, the three unions representing more than 33 000 Eskom staff members have succeeded in negotiating a dream wage deal.

But how do they sleep at night after grabbing salary increases way above inflation for the next three years and a R10 000-after-tax pasella (‘gift’ in Zulu, and ‘settlement bonus’ in this case) per worker to seal the deal?

Apparently, they sleep very soundly, dreaming about the next engagement with Eskom management aimed at securing annual bonuses of at least 12% of their annual remuneration.

After all, they don’t have to lose sleep over the unprotected strike and unlawful sabotage of Eskom operations and assets they embarked on. Yes, it did result in load shedding that the very fragile local economy couldn’t afford and yes, Eskom did incur millions of rands of extra cost in an effort to keep the lights on, but hey, the unions will see to it that no member of the bargaining unit will be disciplined.

In fact, the National Union of Mineworkers (NUM) and the National Metalworkers Union of SA (Numsa) made the signing of the deal dependent on assurance from Eskom that their members would not be disciplined.

At more than R330 million for the R10 000 pasella every worker will get, and with a 7.5% salary increase in the first year, the cash-strapped Eskom will have to cough up more than R1 billion in additional staff costs this year.

The unions argue that Eskom is in its current precarious state not because of anything their members did wrong, but as a result of the shenanigans of the Molefes, Singhs and Kokos (Brian, Anoj and Matshela; former CEO, CFO and chief generation officer respectively).

This argument does not hold, says economist Mike Schüssler. Much has been said about Eskom’s inflated staff numbers and low productivity. Those very members of the bargaining unit have benefited handsomely and gave very little in return.

Schüssler says Eskom staff do not appreciate how well they are remunerated in comparison with most of their countryfolk, including many professionals. He says they hold the country ransom by sabotaging the Eskom power system if they don’t get their way.

“With this attitude, Eskom will not recover and will continue to weigh on the whole economy,” says Schüssler.

Tactical errors by management

The unions argue that Eskom’s new leaders provoked their members when they initially offered no increase and later maintained that no bonuses would be paid either.

Dennis George, general secretary of trade union federation Fedusa, agrees that things went wrong right at the start. He says it was a tactical error to offer no increase. When public enterprises minister Pravin Gordhan intervened to get the parties back to the negotiating table, the unions smelt blood and went in for the kill, he says.

George’s constituency is not involved in the negotiations, but he knows the collective bargaining environment very well.

Management’s next mistake was to link the negotiations to the disciplinary process, he says. “Rules have to be adhered to. A company does not need the approval of the unions to apply its disciplinary code.” Eskom management looks like a scared Chihuahua, he says.

He questions the experience and skill of Eskom’s new management in collective bargaining and says there is also a lack of political will to take a strong stand.

George says unless the relationship between Eskom management and the unions improves to a level where workers truly support management, the turnaround of the embattled group won’t succeed.

Chris Jacobs, employee relations specialist at OIM International, says Eskom cannot afford to waive disciplinary steps against these union members. “It will make a mockery of the whole disciplinary code. How do you act against individuals in future if you ignore these transgressions?” he asks. He points out that, according to Eskom, the union members didn’t just withdraw their services – some actively sabotaged Eskom and, by extension, the economy.

Jacobs says the settlement bonus is something relatively new in local collective bargaining and warns that something like this, which has nothing to do with negotiations about fair remuneration, can quickly become the norm.

He also warns that this generous wage agreement would increase the unit cost of Eskom’s production. Since Eskom does not have control over its tariffs, it cannot merely recover the increased costs from consumers, and retrenchments could follow.

“The workers are making themselves redundant,” he says.

Jacobs adds that there is clearly no alignment between management and staff at Eskom about the state of the utility, the reasons behind it, and what is needed for the enterprise to recover.

He says workers have to understand that their wellbeing is dependent on the wellbeing of the company.

It would take a fundamental and extensive intervention to develop an understanding of these issues among Eskom staff and change their attitude.

Without that, he says, the Eskom turnaround is doomed to fail.

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We seriously need a Margaret Thatcher type of person at the helm of this country – NOW.

Unfortunately none on the horizon.

I was thinking more Genghis Khan myself actually

Better still, the ANC’s Big Brother Xi Jinping of China. There are no trade unions in Communist countries. But who are the new colonialists? It’ll happen the great dragon moves at its own pace, but man oh man, are the toyi toyi’ers in for a humungous surprise.

If the Unions are blaming Eskom’s previous management for it’s financial woes,
then they should be demanding that Guptas, Molefe, Anoj Singh, Koko etc. ALL are convicted and SENT to jail, then maybe they have a valid case…..
BUT to demand increases, when they are 10 times overstaffed AND generate LESS electricity than in 2007 , there are huge problems with them and this country!???
Its time to seek greener pastures elsewhere!??

A fair reflection of the competence of SACP and Zuma finance minister Pravin Gordhan. He totally undermined the new CEO and bought 2019 votes.

Foreign investors see this.. look at the 10 year bond rare,rand , petrol price and local inflation.

Gordhan is a smooth talker with zero substance. Trapped in 1965 GDR politics. A hopeless case

Gordhan gets around things by making cynical jokes.

Agree. Judge them by their actions, not their words. I too have begun to get irritated with Gordhan, what has he actually done in the past few years??!

He was Zumas finance minister for years. No substance at all. Smooth salesman…but investors saw through him

All with approval of ANC who created the monster.

A pharmacist by trade. While at SARS he sorted Zuma’s tax woes, hence his promotion to FM.

South Africa has a choice, have job growth or wage growth because you cannot have both.

I know what I am about to say might be controversial.

S.A. is in a State of War, just because no army is running around, there are other similar events taking place. This can be seen in the way people behave.
When a country is at WAR people tend to think about Present only that’s why many people live on pay cheque to pay cheque making the majority of their purchases of survival items (food ect), not only because inflation erodes the value of money quickly but because there is a sheer State of Panic And it’s a do whatever it takes to survive.

If S.A. was not in a State of War but rather in State of Peace, people would then think about the future and there actions/ behaviour would be examples of saving for tomorrow , investing today for a better tomorrow and using only a portion of there earnings for purchasing of survival products .

Eskom and all the SOE need to collapse as they have created a precedent of what employees should expect from their employees. Which is an uncompetitive Low Yielding Labourer vs High Financial Reward that hold the employer hostage if the unreasonable demands are not met.

The down grade is here, you just don’t know it and then there will be Mass Media panic watered down by politicians as slogan of the Western suppressive tactics.

The Escom debacles is possibly one of the most graphic examples of the short-termism attitude that is South Africa today and why we are in such dire straits with very little to look forward to.

Management agreed to the deal – did it not?

Yes, “what management?”

“Management” are on the same side as the workers, they benefit from the increases too, plus, its not their money and they don’t care about the welfare of Escom.

Not at all. The CEO said no raises. Gordhan castrated the man publicly and entered into negotiations terrified of power cuts . Gordhan must go-he is old, ineffective , a commie and delivered nothing as Zumas bank manager

…and exactly the same will happen at the Post Office once they do pension pay outs. Increases coming as they hold all to ransom…

SA is a country run by gangs. And they have the government by the balls, since no alternative energy is available and they want to keep it as such. The rich can go off grid or has many more alternatives but is the poor that ultimately suffer. Just be careful for those same poor people that have later nothing to lose.

It is as if the anc is so scared of the unions that they simply can’t or don’t want to see the real financial picture of any state owned organization. All of these organizations including government admin staff (why 9 provinces when 4 operated 100x better at a much lower running cost??) are currently overstaffed by thousands of overpaid / non-qualifying / non-qualified / incompetent employees – the same people belonging to unions and that means a nice monthly membership fees income to the union’s employees with fat salaries – the lesser the membership of the union the lesser their main source of income. Nobody will convince me that any union employee has a single sleepless night about a union member’s working condition or any problem at work – it revolves around (here the union leaders’ capability to do maths just suddenly kicks in) the higher the number of members the union can obtain and keep from these employers, the better – the more the merrier – it keeps the union’s clock turning and provide fat salary packages to the union’s secretary and company. Where the unions’ leaders maths stops is by calculating the financial and long term effect what unreasonable and unjustifiably salary increases financially has on an organization like for example bankrupt eskom / SAL / Prasa / Transnet etc. It is the same people that announces that it is unfair for the mines to reduce their employees by 13000 – but where do they think will the money come from to pay the expenses (the wonderful negotiated new salaries included) of the organization whilst it is making a continues loss – one mine group announced yesterday that they had a loss of +/- R5000 billion – it is here where unions can’t or do no want to distinguish between a half afloat government owned organization with government guaranteed loans and organizations in the private sector, with no government support at all. (like the Chinese loan of R30 billion to eskom – no private company with such a rotten set of financials will ever be able to borrow a cent from any bank or any other creditor) Eskom etc can still muddle on with government guaranteed foreign loans to keep them afloat for a short period of time – that does not and will not happen in the private sector – if the company is dead it is dead and not kept half alive like eskom by government guaranteed foreign loans. To me the R10 000 passella per employee is something like: “Members during the strike and sabotage of eskom property we have lost our montlhly salary, but as an union we negotiated on your behalf to get a nice once off bonus for the damage done – next year we do the same, most probaly china will pump in another lot of money into dying eskom”. What the unions don’t want to hear is: “Just get rid of unnecessary employees doing nothing after all but demand better salaries and working conditions” and eskom will see an immediate cash flow improvement on its monthly management accounts.

The following proposal could have many advantages:

As result of Eskom cash-flow crunch, they can learn from some small private companies in financial trouble: you start paying salaries LATE.

For example, this August’18 pay can shift to say 10 Sept payroll run (once there is sufficient funds).
September-pay can be paid mid/end October.
October-pay can be scheduled for end Nov / begging December’18, so so forth.

(i) Eskom will have reduced/delayed running expenses, with 10 or 11 payroll runs in a 12-month cycle.
(ii) Workers will start APPRECIATING that they still have jobs, and happy they have received pay at least, although a bit late…it will eventually come. (You tire out the workers’ nerves)
(iii) Commercial banks will make extra income from returned debit-orders.

Win-win situation.

Eskom is already running behind with salary payments. August is only paid in end of September…and so on. So that wont work.

Do you relish the thought of burning trucks and power stations, and infrastructure?

Easy way to balance this out is to retrench 50% of Eskom’s workforce.

Management of Eskom are using money they haven’t earned and quite possibly would not be able to – taxpayer’s money. You and I break ourselves in half to earn income, either via salary or our business and then pay ADT, private schooling, private health care with our AFTER tax money. So the educated workforce, working in a very economically depressed environment, already carrying the hidden taxes of inflation, poor services, fuel levies and BEE trading are required to make a profit, are required to pay 28 or 45 % of that to a proto-Marxist gangster cadre, who in turn disabuse it at ESKOM, SAA etc ad infinitum. As an economic model, this is probably similar to the German economy in 1944, where all social wealth was sucked into a vortex of military expenditure, with zero economic return. Our vortex is equally cataclysmic, just the destination is the financially illiterate and integrity-deficient rabble who are cannibalizing the Beloved Country, with zero return. When it all collapses and it will collapse, they’ll then dig up Cecil John Rhodes or John X Merriman and blame it on them of course

My personal opinion is that ALL unions must be declared illegal and removed from SA.

unions contribute to Eskom becoming an entity which is not even capable of business rescue – like it was 25 years ago in the UK unions are the tail here wagging the dog – unions are not able to foresee that their actions could sink the economy and here are no authorities to directly discipline them – therefor a suggestion could be to apply to the high court theliquidation of Eskom to get rid of it’s parasites and appoint the really competent personnel – there is no other option for this bunch of looters an to get rid of them

Trade unions are destroying South Africa. I think SADTU is the worst and most dangerous as they will condemn South Africa to a future of poorly educated workers unable to compete in a world where jobs require ever higher levels of education. SADTU are intent on dragging the level of teaching down to that given by the worst teachers.
If Eskom collapses, so will our economy. These unrealistic wage increases are tantamount to treason.

Ironically, you could probably fire at least half the workforce and the energy security of the country would improve.

SA is holding this gun against its own head. As long as Eskom is the only power supplier they could ask for a 100bn bailout tomorrow or they switch off the power. What alternatives would we have? None. Their unions can ask for anything and they know it.

We cannot hang the future of a country and every business in it on one sick institution.

Why do you think they are fighting so hard to scupper the IPPP? They know competition when they see it. It is up to every South African to support the rolling out of alternative energy producers in this country. It is our only hope.

Wow. Why? R10 000!? Man, cmon. This is unfair. I work for myself and have no union. If i do not get a patient or a contract, I strive, man. Alone. Until money comes in. Working so hard, still the eskom workers are many times richer than me and they work half as hard. I see them on the news clips, strolling in to work at 10am. Anyway, my rant won’t change anything. We all (all south africans and those who live in it), cowtow to violence. Unions smell like violence to me and i do not disagree with them less they kill me. It’s like arguing with a prisoner known for causing death with rusted, home made weapons.

For sure. That’s why hard workers like yourself, with a certain skill-set, and correct mindset, are valuable to foreign companies. Consider looking beyond SA Titanic’s borders for future employment or contract work.

Even better, if you are able to earn foreign income while living/working in SA, just as good. Hedge against getting poorer. The rest of “us” earning in ZAR, we just get poorer on US$ terms.

Total and utter incredulity is the only way to describe my reaction to the outcome of this sorry saga. It is truly beyond belief how ‘management’ (and I use the term VERY loosely) does things at that monument to incompetence. There is no hope left for that place, none whatsoever. The problem is… the entire country is chained to this block of concrete and its about to get tossed off the deep end of the pier.

I’m confused why sabotaging of sensitive national assets is considered an internal Eskom matter? Surely this is criminal sabotage and trechery to be prosecuted by the state?

A general worker(read gardener) earns more and receives more perks than my daughter with a BSc honours and 3 years work experience.

Trade Unions have proved one thing only and that is the furthering of their members’ interests at any cost. Their lack of morality is astounding, whether it be at Eskom, education, the medical nursing profession or municipal services just to name a few. When taking on employment, unless they are cretins, they did so in the knowledge that their input was intended to promote a progressive, efficient and productive nation and economy. To use these positions to hold those they are supposed to serve to ransome is not only a dereliction of duty but the basest of action anyone could contemplate. It is a disgusting show of careless power mongering that should bar them from serving in like service industries ever again. They are all either bloated in numbers, incompetent in service delivery or uncaring of those they undertook to support and no level of censure of their actions will be too stringent. They are at the forefront of a country’s slide to junk status and in effect supported by an administration’s lack of definitive action which is inexcusable.

Absolutely shocked by this article. This is ‘traitorous’, if there is such word, conduct. The unions are prepared to wreck what is left of the economy for monetary gain. There is no thought for the unemployed, poor just short gain for themselves and the bloated, inefficient, greedy labour force. Perhaps it will be a good thing if the Chinese take over.

We should not be shocked by what the unions have negotiated. Yes, the sabotage that was done by members is inexcusable and should attract the full force of the law but the union was just doing what unions do – negotiate / blackmail in any way possible to enrich their members so they can pay their union dues. Additional (unnecessary) employees means more fee paying union members – manna from heaven for them the last 10 years. The blame for the unions behavior lies squarely with the ANC government who has allowed and continues to allow unions to run amok. Unfortunately it would be unrealistic to expect government to do anything about this as this is a massive voting bloc for them. We are therefore in a very bad downward spiral where each needs the other to survive and in doing so, they are killing the economy. It does unfortunately mean that the situation has to get far worse before their bond is broken. In doing so, we as hardworking small business owners, taxpayers and law abiding citizens are going to get pummeled as it all starts unwinding. When Zuma was voted in, the Rand was at R7 / $. Look at the trend people and plan accordingly for your families future. To continue expecting different results from the same actions is, as Einstein said, insanity.

Pleading innocence for the depredations of their venal former bosses is disingenuous at best and outright dishonest at worst. Cosatu, and all its affiliated unions, must remember their shameless lobbying for Jacob Zuma in 2009 and again in 2014. They exhorted their members to “ensure a win at the polls for Jacob Zuma” in 2009, and continued to support his government, even when the cracks started showing. Their members, with an FFF you Jack, I’m all right attitude, did NOT stand up and threaten to resign as Union members if Cosatu did not bring Zuma’s government down. They could have hammered the fear and respect for the people into the ANC, but they did not. They don’t deserve squat, and it is disgusting that Gordhan has caved in to them.

End of comments.

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