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Eskom Union Warns of Worker ‘Time Bomb’ Over Wage Talks

July 2 (Bloomberg) -- Eskom Holdings SOC Ltd. has an angry workforce whose discontent at below-inflation pay increases is fueling the risk of employees walking off the job, according to the National Union of Mineworkers.

“Eskom are sitting on a time bomb,” said Frans Baleni, general secretary of the NUM, the biggest labor union at the state-owned power utility. “Last year, workers got a less-than-inflation increase -- 5.6 percent. This year, they are repeating the same thing. Watch this space. The workers could get out of control.”

Staff at Eskom, which supplies 95 percent of electricity in Africa’s second-largest economy, are prevented from striking because they are deemed as essential to the functioning of the country. Workers at the utility would risk losing their jobs if they joined what South African labor law defines as an unprotected strike.

Eskom has offered a 5.6 percent pay increase. South Africa’s annual inflation rate was 6.6 percent in May.

Employee attendance at Eskom’s Medupi and Kusile power-plant development sites was more than 30 percent lower than usual yesterday, said Andrew Etzinger, a spokesman for the utility. Workers at those plants are generally contractors and not directly employed by Eskom or bound by law preventing them from striking, he said.

“Our relationships are generally good with our employees,” Etzinger said today. “There are times such as this during wage negotiations where there can be disputes, but there’s not an acrimonious relationship between Eskom management and employees.”

Power Constraints

Eskom is attempting to keep costs down to partly fund a 225 billion-rand ($21 billion) financing shortfall over the five years to March 2018. It is building coal-fired generation units at Medupi and Kusile to expand the country’s stretched power supplies.

“By denying workers the right to strike they are sitting with a very angry workforce,” the NUM’s Baleni said in an interview in Johannesburg. “If you have an angry and unhappy workforce they will resort to other methods of sending a message that they are not happy.”

The National Union of Metalworkers, South Africa’s largest labor union and the second-biggest at Eskom, continued a nationwide strike of 220,000 workers for a second day. Eskom gained a labor court interdict barring the union from downing tools, Eye Witness News reported.

Finance Minister Nhlanhla Nene has said the country will probably miss this year’s growth target of 2.7 percent after a five-month long platinum-mining strike caused the economy to shrink in the first quarter.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Ana Monteiro

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