Eskom’s cost per employee increased from R38,000 in 1990 to R913,000 in 2024

Eskom’s cost per employee, which is a strong indicator of average salaries, increased from R38,000 in 1990 to R913,000 in 2024.

These rapidly escalating employee costs had a direct impact on electricity prices in South Africa, which increased by 190% since 2014.

At the turn of the century, South Africa had cheap and abundant electricity, which enabled heavy industry to thrive in the country.

Eskom was a well-run company and even won the Power Company of the Year award in the Financial Times’ annual Global Energy Awards in 2000.

However, mismanagement, corruption, cadre deployment, and strategic blunders ultimately led to the demise of the once-brilliant power utility.

Over the last sixteen years, Eskom’s financial and operational performance has declined significantly, and it is now generating less electricity than it did in 2008.

What is particularly concerning is that Eskom is spending far more money, even though it generates less electricity.

One of the problems is its bloated workforce. A World Bank policy research paper found that Eskom has too many employees.

The researchers found that in 2014, South Africa’s power utility had the largest workforce out of the 39 sub-Saharan African countries at 41,787.

The World Bank estimated that Eskom required a workforce of only 14,244 people to serve its customers. It proposed one employee for every 413 electricity customers.

Eskom was, therefore, 66% overstaffed. The only other countries with staff levels higher than optimum were Zimbabwe (67%) and Zambia (71%).

The problem started in the early 2000s. The company increased its workforce from 29,359 in 2002 to 48,628 in 2018.

Despite this significant increase in employee numbers, there was no corresponding increase in power generation.

Another problem is that, despite Eskom’s large number of employees, it has a lack of skills within the company. This suggests that Eskom have employed the wrong personnel.

Eskom’s cost per employee increased from R38,000 in 1990 to R913,000 in 2024

Efficient Group chief economist Dawie Roodt said many state-owned enterprises, including Eskom, are poorly run and are collapsing.

In 2023, Roodt said that Eskom was essentially bankrupt. “It has been operationally and financially run into the ground,” he said.

He said around 40,000 people work at Eskom and enjoy inflated salaries, which put strain on the power utility’s finances.

“Last year, Eskom employees received a 7% increase. It is irresponsible. These workers are already overpaid,” he said.

BusinessTech calculated the average cost per employee at Eskom over the past 35 years, revealing a rapid escalation in the money spent on employees.

In 1990, the average cost per employee was R38,000. In 2024, the cost ballooned to R913,000, a 976% increase over 34 years.

The chart below shows Eskom’s cost per employee between 1990 and 2024.