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BusinessLive reports that a three-year wage agreement signed between Eskom and recognised unions will cost R3.9bn in total, but there is no clear indication of how Eskom will pay for the increases.
The context is that the state-owned power utility cannot keep up with its debt repayments, let alone carry unexpected costs. Eskom announced on Thursday morning that it had reached a three-year wage agreement with three trade unions, and would adjust employee salaries 7.5% upwards in the current financial year and 7% upwards in each of the following two years. Housing allowances would also rise in line with inflation and a one-off cash payment of R10,000, after tax, would be distributed to employees. Asked how it will pay for the increase, Eskom said: "We will have to tighten our belts even further as we will have to finance the increase through cost savings and borrowings." One should not fund salaries from long-term debt, but rather from operations, observed energy expert Chris Yelland. "The problem with that is Eskom’s earnings from operations are not adequate to pay the interest bill on its existing long-term debt," he noted. Eskom’s total debt ballooned from R40bn in 2007 to R388bn at the end of March, and is expected to grow to R600bn in four years.
- Read this report by Lisa Steyn in full at BusinessLive
Read too, Eskom wants another 15% tariff hike for three years, at Moneyweb
Get other news reports at the SA Labour News home page