Long, dark winter ahead if Eskom-Numsa wage talks stall

A long and dark winter, with a devastating effect on the economy, is what South Africans could expect, should there be a breakdown in the marathon wage negotiations ending next month between Eskom and labour, according to leading economists.

Economist Mike Schussler said the economy was losing R12 million for every 1 000 megawatts lost per hour during stage 1 load shedding – with R48 million lost in stage 4.

In a bleak scenario of a breakdown in talks, Schussler warned of a gloomy economic picture – forcing the cash-strapped power utility to ask for another bailout from government.

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“The big thing now is whether Eskom can keep the lights on, because if they go off, it is going to cost the economy dearly,” he said.

“Any strike at Eskom will have an impact on the economy and a likelihood of more power outages. Eskom employees should be told that Eskom is effectively bust and cannot afford to pay more.

“Unions must not have such a narrow outlook and must consider how many members in other sectors could lose jobs.”

University of Johannesburg associate professor of economics Peter Baur said it was “possibly in the best interest of everyone” to try avoiding a wage negotiation failure.

“With an already tight fiscal budget, a possible threat of a third wave of Covid-19 and funding needed in other sectors of the economy, may put public spending under additional pressure, with the poor receiving the brunt of the impact.”

Load shedding has serious consequences for investor confidence.

“While emerging markets have seen increased investor interest over the past few months, if load shedding continues, this level of interest could be partially derailed,” said Baur.

“Investor resources will be attracted to economies which will minimise risk pressure. Due to Eskom’s aging infrastructure, we will possibly experience growing concerns – as seen in the attitudes of business and consumers – which, in turn, will have a far-reaching effect.”

With the wage talks having begun this week, National Union of Metalworkers of South Africa (Numsa) spokeswoman Phakamile Hlubi-Majola described the negotiations as being “a long way from a breakdown”.

She said: “Whether we face a cold dark winter is dependent on Eskom management under group CEO Andre De Ruyter. We remain hopeful that we’ll find each other, as long as there is political will on the side of the executive management to engage meaningfully.”

Eskom spokesman Sikonathi Mantshantsha said the utility was approaching the talks in good faith, “with the best interests of the company, its employees and SA at heart”.

He added: “Wage talks may be unpredictable and, depending on the positions taken by the parties, could result in tensions arising.

“Eskom would like to assure the public it will do everything possible to attempt to reach consensus that is financially sustainable and in the best interest of its employees, the public and the country at large.

brians@citizen.co.za