Another factor that saw employee benefit spending skyrocket is overtime.
Minister of Electricity and Energy Dr Kgosientsho Ramokgopa. Picture: Sharon Seretlo/Gallo Images
Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, has revealed that Eskom increased its employee benefits spending by R13 billion over the past two financial years.
The rise in employee benefit spending comes as Eskom remains burdened by billions of rands in unpaid debt from municipalities, government departments and companies. Meanwhile, South Africans are grappling with steep electricity price hikes that have pushed electricity beyond the reach of many households.
In a parliamentary response to questions from DA MP Andrew Bateman, Ramokgopa defended Eskom’s increase in employee benefit spending. It is worth noting that employee benefits can include retirement contributions, overtime pay, medical aid, and car and housing allowances. The minister did not specify whether the amount includes salary increases.
Eskom hikes tariffs and employee benefits
Bateman asked, “What is the detailed and quantified rationale for such increases?”, referring to a presentation made by the embattled state-owned entity (SOE) earlier in the year, showing that Eskom employee benefits increased by 37% in the past two financial years, from R35 billion to R48 billion.
Justifying the increase, Ramokgopa said multiple factors primarily drove Eskom to increase spending on employee benefits.
The first being performance incentives. He said these were paid “where performance metrics were met, including the reintroduction of the financial year 2025 Short-Term Incentive (STI), for the first time in eight years (i.e. 2017), which is self-funded from Eskom profits in line with the Debt Relief Act, as well as the production bonus, again self-funded and rewards employees for improved efficiency, operational productivity and performance in the production environment, as well as for the reduction in the number of zero prepaid buyers in the distribution environment.”
Wage agreement gives Eskom employees a boost
Ramokgopa cited the implementation of the 2022-23 multi-year wage agreement, linked to collective bargaining outcomes, as the second factor behind the increase in employee spending.
“Critical skills recruitment and filling of vacancies to stabilise the business following a period of workforce reduction as a result of the erroneous World Bank report from 2016,” added the minister in his reply.
Another factor that saw employee benefit spending skyrocket is overtime, justified by staff needing to achieve the Generation Recovery Plan’s desirable goals.
“Higher overtime, standby and shift costs to execute operational recovery plans, notably the Generation Recovery Plan to resolve load shedding and the focus on resolving customer faults timeously by our Distribution business,” said Ramokgopa.
Closing the gap
The minister said another factor that has employee benefits ballooning to the forecasted R48 billion for the 2026 financial year is the need to address income differentials to align remuneration with the market and to correct historical pay equity gaps to bring previously disadvantaged groups up to parity.
Another reason cited by Ramokgopa is “retention interventions and relocation costs to secure scarce technical and operational skills in critical business areas”.
This is followed by “actuarial adjustments to long-term employee benefit obligations (pensions and medical aid) driven by inflation and healthcare cost changes”.
And “insourcing of key services, reversing previous outsourcing decisions and shifting personnel costs from contractors into employee benefits, particularly in security and operational support functions”.
Operations costs increase
Bateman’s second question asked for the reasons that operating costs increased from R44 billion to R52 billion in the past financial year.
Ramokgopa said the increase reflects both contractual wage adjustments and deliberate capability strengthening to support operational recovery and system reliability.
He cited inflation as one of the reasons driving the increase. “A natural increase in inflation means that supplier contracts would increase by at least this value,” he said.
“Some expenses in this category would also be influenced by exposure to commodity price escalations and forex exposure.”
