Flash Briefing: Eskom’s bloated labour force wants 10% pay rise; tighter Covid-19 restrictions for Easter?

  • The biggest union at South Africa’s loss-making power utility Eskom is considering demanding pay increases of as much as 10% ahead of negotiations scheduled next month, reports Bloomberg. The National Union of Mineworkers has about 16,000 members at Eskom. The state-owned entity is struggling to meet electricity demand as a result of  breakdowns from poorly maintained coal-fired plants and is simultaneously looking for a solution to address a debt pile of R464bn ($31bn). The utility bowed to pressure from labor in 2018 wage negotiations after strikes that crippled the grid, agreeing to a one-time cash payment and annual increases of at least 7%. South Africa’s Deputy President David Mabuza, who chairs the political task team on Eskom, recently told lawmakers that Eskom needs to significantly reduce its number of employees. “The amount of workers at Eskom has doubled in size since 2008 but the amount of energy that we are producing is getting less,” he said.
  • South Africa’s central bank held its benchmark interest rate for a fourth straight meeting, with its projection model showing it could hike after the monetary policy committee’s next deliberation in May. The MPC kept the repurchase rate at 3.5%, The key rate remains at the lowest level since it was introduced in 1998. Inflation is now expected to average 4.3% this year, compared with the MPC’s January estimate of 4%. That’s after it accounted for increases in global oil prices and a larger-than-expected domestic electricity tariff hike. The unchanged stance is likely to draw criticism from politicians and labor unionists, who say the Reserve Bank should be doing more to support the economy and reduce unemployment that’s at a record high. GDP contracted by 7% in 2020 and the government only expects output to return to pre-pandemic levels in late 2023.
  • The chairman of South Africa’s Ministerial Advisory Committee on Covid-19 Professor Salim Abdool Karim has stepped down amid speculation that tighter restrictions loom over Easter – and as the government is criticised for the slow delivery of vaccine roll-out.
  • South Africa’s most successful female financial services entrepreneur Sygnia founder and co-CEO Magda Wierzycka is handing over the reins to joint CEO David Hufton on 1 June 2021.
  • The world’s economic engine room – the US – is showing signs of recovering faster-than-expected from Covid-19 containment measures. Economists surveyed by BizNews partner The Wall Street Journal this month raised their average forecast for 2021 economic growth to 5.95%, measured from the fourth quarter of last year to the same period this year, from a 4.87% projection in February’s survey. Widespread vaccinations, easing business restrictions and government stimulus are helping spur economic growth. Americans are spending more on in-person services such as restaurants, gyms, hotels and salons, that were battered by the coronavirus pandemic. US employers added 379,000 jobs in February, and the unemployment rate ticked down to 6.2%.

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