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Eskom is said to extend job cuts beyond top management tier

7th January 2019

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Eskom Holdings will extend its strategy of trimming top executive positions to include lower ranking managers and finally the general workforce as South Africa’s cash-strapped power utility looks to cut costs, according to a person familiar with the plans.

The state-owned company last month reduced its highest executive structure to nine positions from 21 by regrading and combining roles. The next phase is to cut a 600-strong layer of managers – known as E-band employees – by at least 70%, according to the person who requested anonymity because the information isn’t public.

The latest notice on job cuts “is only limited to executive level,” Eskom spokesperson Khulu Phasiwe said in a text message. He didn’t comment on cuts for other managers or staff.

President Cyril Ramaphosa replaced Eskom’s leadership last year to help root out graft that contributed to the unsustainable financial state at the utility that supplies almost all of the nation’s electricity. While the new management has taken measures to increase transparency, a turnaround plan for the business has been delayed. The President on December 14 appointed a panel to advise the government on how to resolve the producer’s operational, structural and financial challenges. The utility is mired in debt and isn’t selling enough power to cover all its costs.

A World Bank study in 2016 found that South African utilities pay workers more than double the norm in 35 other countries on the continent, and that Eskom is potentially 66% overstaffed.

At least 10 000 people on Eskom’s payroll of 48 600 could lose their jobs, according to the person. This will include natural attrition, and the broader reductions won’t likely occur until after South Africa’s Presidential election in about May this year, the person said.

Edited by Bloomberg

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