Eskom power cuts forcing South African businesses to slash jobs

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Load-shedding comes at a high cost to South African businesses, and some are forced to cut jobs to stay afloat.

According to a City Press report, Eskom’s rotational power cuts are causing unemployment to rise sharply as companies implement cost-cutting strategies.

Businesses are reducing staff to minimal levels to try and survive the harsh economic conditions in the country, with some having to close their doors when they still can’t cover their costs.

Cliffe Dekker Hofmeyr’s director of employment practice, Hugo Pienaar, told City Press that companies like Telkom face high additional costs to generate power.

“Employers must now try to save costs somewhere. Cash flows have dried up. They have to decide whether to close down or let a certain number of people go.”

“And if we look at the current context, companies will probably continue laying off people in order to save the majority.”

Telkom announced that it would be retrenching 15% of its workforce to “ensure the sustainability of the group” on Tuesday, 14 February 2023.

In an internal email to staff MyBroadband has seen, Telkom CEO Serame Taukobong said the impact of sustained load-shedding has put pressure on the company’s costs.

“This is not a decision that was taken lightly,” he said.

“I am conscious of how unsettling these times can be as we try to work through the consultative processes and continue to service our customers and clients as best we can.”

The network operator spent R150 million in a single quarter to fight the effects of ongoing load-shedding.

The Communications Workers Union (CWU) described Telkom’s retrenchment decision as “outrageous”.

However, Telkom isn’t alone in forking out millions to combat rotational power cuts.

Pick n Pay is spending R60 million each month running diesel generators to keep its lights on.

The retail group reported a boost in sales and turnover for the period of the 43 weeks ended 25 December 2022, despite a “significantly more difficult trading environment”.

“Our priority has been to provide an uninterrupted service for customers in our stores, whatever the level of load shedding,” BusinessTech quoted Pick n Pay as saying.

“Inevitably, load shedding has disrupted customers, with some impact on turnover.”

“Of greater consequence, however, are the substantial unplanned costs incurred in running localised power generation for stores,” Pick n Pay added.

While they haven’t announced job cuts, mobile network operators Vodacom and MTN have spent billions of rands on backup power solutions for their infrastructure.

This has a significant impact on their profitability.

Vodacom CEO Shameel Joosub last year revealed that the company spends around R1 billion on batteries, generators, and security for their towers each year.

“When it comes to power outages, we spend over a billion rand a year on batteries,” he said.

Joosub said Vodacom was trying to ensure that all 15,000 of its towers had sufficient backup batteries to keep its network online.

“Creating resilience is the single biggest issue that we have today in terms of South Africa’s network performance,” he stated.

“We are constantly having to improve the standby time. First, it was four hours, then it became six hours, then eight hours.”

In November 2022, MTN’s quarterly trading update for the three months ended September 2022 revealed that load-shedding is significantly impacting its revenue.

“This result was delivered against high inflation, rising interest rates, unemployment and unprecedented load-shedding, which negatively impacted the overall network availability and some business functions,” the company said.


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