Eskom jobs shock

Eskom jobs shock
Huge 25% tariff hike will put 250 000 out of work
Feb 24, 2010 10:58 PM | By SIPHO MASONDO, SALLY EVANS, NKOSANA LEKOTJOLO and JUDY LELLIOTT

The SA Chamber of Commerce and Industry said it expected 250,000 jobs to be lost during this period as a direct result of the price hikes.

More than 900,000 jobs were lost last year, during the country's worst recession in 17 years.

The National Energy Regulator of SA's announcement that it had approved electricity tariff increases of 24.8% this year, followed by 25.8% next year and 25.9% in 2012 was condemned by business, labour, opposition parties and the ANC's alliance partners, Cosatu and the SA Communist Party.

Cosatu threatened to call a national strike, while the communists branded the increases a "catastrophic betrayal of the poor.

Amid the deluge of criticism, the ANC expressed concern about the effects of the hikes on the poor, but praised the regulator for not giving in to Eskom's original request for three consecutive increases of 35% to fund its urgent capacity-building programme.

The utility needs more than R385-billion to finance capital projects over the next five years to meet the country's long-term electricity needs.

Consumers will be hit by a hefty double blow in April when the first electricity hike takes effect. The petrol price is expected to rise then, too, when increased fuel levies totalling about 33 cents a litre are implemented.

Economists say the knock-on effect on food prices will be felt shortly afterwards.

A family that spends R500 a month on electricity now will pay R625 from April 1.

By next year, electricity will cost the family about R780.

In 2012, that will rise to R975.

On job losses, the chamber of commerce's spokeswoman, Peggy Droski said the most jobs were likely to be shed in the mining, engineering and manufacturing industries because their operations depended heavily on electricity.

Droski said: "Take mining for instance, because of high electricity hikes it will affect their profit margins, therefore forcing them to retrench workers.

"Small companies will be the hardest hit [and they employ the most people in the country]. Many of these small and medium enterprises will close shop because they won't be able to afford the hefty hikes."

The SACP was particularly harsh in its criticism, flaying the government for allowing Eskom' s infrastructure costs to escalate.

"That the majority of our people are expected to pay for the blunders of the elite is indeed very sad,'' the party said in a statement. ''The government ignored well-timed and considered advice to invest in the infrastructure development projects of Eskom ."

Cosatu's Patrick Craven said the hikes were "totally unacceptable".

"Cosatu will engage with alliance partners and continue to fight these increases. If no progress is made in these discussions, the federation will not shrink from mobilising its members, and the wider South African public, in strike action and protests in the streets against such a savage attack on our living standards and economic future."

The National Education, Health and Allied Workers' Union said: "This increase makes a mockery of the government's promise for the creation of decent work because it threatens the survival of small businesses whose collapse would exacerbate the loss of jobs.''

Spokesman for trade union Solidarity Jaco Kleynhans said: "Eskom and Nersa will be to blame for the consequent loss of several thousands of jobs."

Investment Solutions economist Chris Hart said although the country was emerging from the recession, the combined effect of the increases in the prices of fuel, power and medical aid contributions, coupled with a gloomy outlook for salary increases, would put consumers under tremendous pressure.

National Consumer Forum chairman Thami Bolani called the increases "very steep and harsh".

"We would have been happier with an increase of about 10% to 15%. Food prices are going to go up, we are also going to see the price of transport going up. The benefits and relief that the poor were going to get from the finance minister's Budget will now disappear as they have to channel all that money to electricity costs," he said.

Econometrix economist Tony Twine said the electricity price increase would retard the economy.

Inflation would increase by about 0.45 percentage points over the next three years, meaning the projected growth of GDP by 6% annually would not be possible.

"Econometrix's view is that we are likely to achieve 3.5% [GDP growth]. The problem is that we need a minimum of 4% to create substantial employment growth."

Dr Manie van Dyk, the DA spokesman on public enterprises, said: "Not for the first time it is consumers who are being made to pay for the failures of the ANC government."

In its response, Cope said the effects of the increase, coupled with the government's failure to make good on its promises to create more jobs, were a recipe for further service-delivery protests.

The ANC thanked Nersa for "applying its mind" to the increases, saying they were a "vast improvement" on Eskom's original request.

Party spokesman Jackson Mthembu said: "Although we congratulate Nersa, we should at the same time state that the electricity tariff increases remain high and require other interventions to reduce the endemic poverty in our country."
http://www.timeslive.co.za/local/article325297.ece