South Africa may be in the dark before the end of this week

The Commission for Conciliation, Mediation and Arbitration (CCMA) gave Eskom until 10h00 on Wednesday, 23 June for internal consultation before responding to revised remuneration demands from three trade unions, after negotiations ended in disagreement on Monday night. If there is not a breakthrough by then, strike action by the unions could begin before the end of the week.

The unions involved in the talks with Eskom are the National Union of Mineworkers (NUM), which is South Africa’s largest labour union and is affiliated to the Congress of South African Trade Unions (Cosatu); the National Union of Metal Workers of South Africa; as well as Solidarity.

Cosatu is also in a ruling alliance with the African National Congress (ANC) and the South African Communist Party (SACP).

If the negotiations fail to produce a compromise agreement and prevent a strike, it will have a highly negative outcome for the country. It could:

· cause electricity supply disruptions, affecting the Soccer World Cup;

· cripple the mining and manufacturing sectors;

· lead to more job losses;

· cause huge losses for an economy still struggling to recover from the global recession;

·  further inhibit Eskom’s ability to speedily expand its generating capacity in order to avert a national power crisis; and

· could possibly have serious political consequences by raising tensions between Cosatu and the ruling party.

Strike warning out

While the NUM, which represents about half of Eskom’s 32 000 workers, last week issued a warning that its members could engage in a crippling strike, a union spokesperson said on Monday morning that the union hoped “it won't come to a strike”.

The union’s original demands of a pay increase three times above the inflation rate of 4.8% seem excessive, particularly in view of current economic considerations and the massive negative consequences a strike may produce.

However, Labour justifies its actions by pointing to excessive greed when it comes to executive pay increases and bonuses as well as the self-enrichment by politicians and politically connected business people.

The latest demand on the table is for a 9% pay increase and a R5 000 per month housing allowance per employee. Eskom‘s revised offer is an 8% increase, 5.6% on key allowances and a R12 000 once-off payment per employee.

If Eskom fails to return with a new acceptable offer, the unions are still in agreement that they would go on strike. The unions are convinced the CCMA will issue a certificate for a dispute if there is not consensus on Wednesday.

Impact on the World Cup

A strike is unlikely to affect World Cup stadiums that have their own backup generators, but fans will be plunged into darkness when they leave the stadiums.

It could also cause a blackout for thousands of fans watching the soccer matches at home on television, while it could affect the hotels and travel arrangements of thousands of foreign fans and the soccer teams, among other things.

The strike further could seriously disrupt transport.

Labour unions have been heavily criticised for using the World Cup as a tool to blackmail the state and private sector employers into granting pay increases way above the inflation rate in such difficult times.

According to a Reuters report, however, South African unions see the World Cup as a once-in-a-lifetime opportunity to extract wage increases and benefits from employers “in a country whose national pride is at stake”.

The report further warns that a strike by Eskom workers could cripple industry in the world’s largest platinum and palladium producer, and might lead to a loss of production in other mines.