South Africans got this wrong about Eskom and load shedding

Allan Gray says that the argument that Eskom’s bloated employee costs have contributed to the power utility’s loss of profit is less true than many may think.

Writing in a recent insight on the effects of load shedding on South Africa’s economy, Thalia Petousis from Allan Gray reported that the company spent R35 billion on staff in 2022 – a 20-year low when expressed as a percentage of revenue.

Petousis said that it is important to consider that while the number of employees has only grown by 1% per year over a 20-year period, the average salary per employee has increased by an almost 9% compounded growth rate annually – above inflation of 5.6%.

She said that if Eskom were paying for key technical and engineering skills, this might be duly warranted; however, it is unclear whether the power utility has done such.

“While the utility took on over 3 000 engineering and technical learners in 2013, it took on only 13 in 2019,” said Petousis.

The graph below shows the cost of staff wages, bonuses and benefits as a percentage of revenue over the course of a decade between 2002 and 2022:

In April this year, Eskom unions demanded a 15% wage increase, including performance bonuses, housing, electricity and cellphone allowances alongside a once-off danger allowance.

Both the National Union of Metalworkers (NUM), the National Union of Metalworkers of South Africa (NUMSA) and Solidarity are negotiating for higher wages.

Eskom employees said that they are not responsible for the current economic conditions and should have their livelihood needs maintained.

Strike action took place in 2022, forcing Eskom to agree to a 7% wage increase agreement after a week of protests, resulting in the country facing stage 6 load shedding for the first time.

Stage 6 has, however, become the norm in 2023, even with no cases of workers laying down tools.

The country is sitting in the dark for hours on end with no sign of relief in the short or medium term, especially going into winter, when demand is expected to reach new highs.

To boost staff productivity and morale, the company appointed a new Group Executive for Generation, Bheki Nxumalo.

Eskom’s acting chief executive officer, Calib Cassim, said that the group needed someone that would passionately drive the Generation recovery plan while ‘inspiring staff to reach beyond their reach.’

Unfortunately, at the most important company in South Africa, there have been well-documented cases of employees engaged in sabotage, corruption and other illegal activities.

In April, for example, two Eskom employees and a truck driver were arrested for the theft of roughly R300,000 worth of heavy fuel oil.

Other recent cases involve the finance department, where a former accountant at the company was ordered to pay back R500,000 he stole through fraudulent activity.

Read: New load shedding stages for South Africa being finalised