June 21, 2010 / 12:12 PM / 9 years ago

S.Africa union says hopes to reach deal with Eskom

JOHANNESBURG (Reuters) - South Africa’s biggest union said it was hopeful fresh wage negotiations on Monday with state-owned power utility Eskom could avert a strike that could disrupt electricity supply during the World Cup.

Electricity pylons carry power from Cape Town's Koeberg nuclear power plant July 17, 2009. REUTERS/Mike Hutchings

“I hope it won’t come to a strike,” said Lesiba Seshoka, spokesman of the National Union of Mineworkers (NUM), which last week warned its members could down tools in a labour action that could cripple manufacturing and mining.

“We are prepared to give negotiations a chance, but if there is no resolution, then we will call for a strike.”

The union, which represents about half of the 32,000 workers at the utility, wants a pay rise of more than three times the inflation rate of 4.8 percent as well as a housing allowance.

Eskom has offered an 8 percent raise and a once-off, 1 percent payment as a housing allowance. Analysts see a last-minute deal as likely. (For a SCENARIOS factbox, click on

)

Seshoka said the unions were ready to give the talks a chance for a few days after being advised by a mediator to tone down their strike threats.

Should the strike go ahead, two other unions have said they may join in the work stoppage, raising concerns about power supply in Africa’s biggest economy.

Seshoka said the talks on Monday started on a positive note.

Bhabhabalazi Bulunga, Eskom’s human resources managing director, said he was hopeful an agreement could be reached.

“This talks are not do or die,” Bulunga told Reuters.

“We are an essential service, and the unions would be holding an unlawful strike if they went ahead with their threat.”

The three unions threatened to strike over pay last year, but backed down at the last minute after they won an increase much lower than they had demanded.

Eskom has said should the strike go ahead, it will implement contingency measures to minimise the impact.

A strike is unlikely to hamper electricity supply to stadiums that have standby diesel generators, but may anger millions hoping to soccer World Cup watch matches on television.

Worse still for the economy, manufacturers and mining companies in the world’s top platinum and fourth largest gold producing country could be forced to shut operations, and this may likely impact metal production and prices, analysts said.

A possible work stoppage at Eskom follows a series of threats of labour action to freeze transport, abandon security posts and tie up immigration at airports during the World Cup if demands for better wages and working conditions were not met.

(For a factbox on labour actions, click on )

Economists says unions are using the World Cup to squeeze pay hikes far above inflation, which could dent the economy as it emerges from its first recession in 17 years.

Eskom workers, represented by three unions - the NUM, the National Union of Metalworkers of South Africa and Solidarity, originally demanded an 18 percent wage increase and a housing allowance, while Eskom offered 5.5 percent.

Eskom has increased its wage offer and the unions lowered their demand to 15 percent.

Seshoka said the average worker at Eskom earns about 5,000 rand a month, and a housing subsidy of 1,000 rand. The unions want this replaced by a housing allowance of 5,000 rand.

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