South African power utility, Eskom, said that the latest pay hike offer could lead the cash-strapped power utility into deeper cost cuts, wrote Reuters. Eskom confirmed that it had proposed to increase salaries of all blue-collar workers by 7%, instead of a previous offer of pay rise by 5,75%, during negotiations with those represented by the National Union of Mineworkers (NUM), reported Reuters.
Eskom’s spokesman, Khulu Phasiwe, said the energy regulator had recommended in 2012 that the company links wage hikes to inflation. However, the present offer by the utility is above inflation, which stands at 6.1%. Accordingly, Phasiwe said that “we exceeded by at least 1% point, we will have to make deeper cuts elsewhere so that we do not affect our financial liquidity negatively.”
According to Fin24, Eskom plans to reduce its costs by $4b over the next three years, Phasiwe stated, adding that the company has already cut back on travel and some of its executives were no longer flying first class.
Eskom, which provides virtually all of the electricity in Africa’s most industrialized country, faced a crippling cash crunch in 2015 that prompted a $5b injection by the government.