Eskom wage dispute heats up

Johannesburg - Diamond miners in South Africa returned to work on Friday after a 14-day strike, while a wage dispute at state power utility Eskom intensified, with unions threatening a strike that could cut electricity to the country.

South Africa has been hit by a wave of strikes that have already dented output in the fuel, gold and coal sectors, threatening to curb growth in an already stagnant economy.

Talks between the National Union of Mineworkers (Num), two other unions and Eskom collapsed on Thursday after the utility refused to improve its 7% wage rise offer. The three unions have lowered their demands to 13%.

"We have come down on our demands but Eskom is refusing to bargain," Paris Mashego, the Num's chief negotiator at Eskom, told Reuters.

The Num demand is well above the country's 5% inflation rate and comes after winning 9% increases for unionised workers at Eskom a year ago, after threatening to walk off the job when South Africa was hosting the Soccer World Cup.

The Num, the country's most powerful union with more than 250 000 members, reached deals this week in the coal and gold sectors for wage increases of 7.5% to 10%, which will likely be used as benchmarks for pay hikes in other industries.

Eskom supplies nearly all of South Africa's power and the utility has been struggling to find the money it needs to pay for new power plants and avoid a power crisis which forced mines and smelters to shut for days and cost the country billions of dollars in lost output.

But a strike is still a long way off as the unions need to go through stringent procedures before workers can walk off the job and Eskom may use courts, seeking an injunction to prevent a work stoppage that could damage the economy.

"It's too early to speak of a strike," said Eskom spokesperson Hilary Joffe.

Any significant pay rises would affect the utility's already strained balance sheet and could lead to Eskom having to raise already steep annual hikes in electricity tariffs.

In a separate labour dispute, more than 200 000 South African water, sanitation and refuse workers said they will announce the date of a strike that could disrupt garbage and water services in major cities on Friday.

Talks are ongoing between the Num and South Africa's top two platinum miners, Anglo Platinum [JSE:AMS] and Impala Platinum Holdings [JSE:IMP], which together account for two-thirds of the world's production of the precious metal.