Eskom – We pay the price for a 66% bloated and overpaid staff complement that should have been retrenched

By Lawrence McCrystal and Hein van der Walt*

‘Cofesa agrees with Mr Temba Nolutshungu, a director of the Free Market Foundation that the electricity crisis in South Africa is self-inflicted, that Eskom is a leviathan which enjoys monopolistic protection shielded from potential competition and that the private sector should be participated in the generation of electricity’, says Dr Lawrence McCrystal and Advocate Hein van der Walt of Cofesa.

For years the business sector called for the deregulation and privatising of Eskom. The present pedestrian pace of deregulation and privatisation make it suspect of hidden agendas, more obtrusive regulations, stalling tactics for oligarchs to grab the lion’s share and playing for time instead of retrenching surplus staff, they say.

The World Bank reported that Eskom is 66% overstaffed. Salaries for 27,543 surplus staff amount to R1,3772 billion per annum. Cofesa calls for rationalising Eskom’s staff complement. It is cruel to raise tariffs and impose levies for a population where 45% suffers from hunger and 35% are unemployed. Raising tariffs in flames unrest.

‘It is immoral to burden the public, captives of a government energy monopoly, with exorbitant tariffs after decades of mismanagement. Why should consumers (which includes the poor) bear the cost of poor management decisions and lavish salaries for a bloated workforce? Instead, modernise by rationalising Eskom’s staff complement to pay off its debt and fast track privatising energy generation’.

The World Bank estimated that Eskom should optimally have 9596 employees for Transmission and Distribution and 4684 for Generation, for a total 14,244. In contrast, Eskom employed 41,787 employees, implying that 66%  (27 543 ) of the total existing staff are surplus. Eskom pays its employees an average of R468,033 a year.  Salaries for 27 543 surplus staff amounts to R1 3771.5 billion per annum (plus benefits). Eskom’s debt amounts to R400 billion rand ($24.32 billion). Eskom cannot afford to service their debt without government bailouts.

Red flag

In September 2022 our oversized government structures were rated even worse at 117th out of 165 countries by the international team of the World Economic Freedom Report  indicative of our economic decline. ‘Government interference in the economy through government enterprises and investment is far too great and weakens both economic freedom and the dynamism of the private sector. An oversized government interferes in economic activities and creates opportunities for corruption and bribes’. ‘Consequently downsizing government will reduce costs and enable tax reduction’ they have noted.

  • Dr Lawrence McCrystal, BSc London University, B Econ (Hons); M Econ; PhD Economics, (Honours & Masters – Cum Laude) cell- 083 320 4833 and Adv Hein van der Walt, BA Hons LLB.

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