Data from Eskom’s annual reports reveal that the company’s workforce and employee costs increased significantly over the last fifteen years without an increase in productivity.
When Eskom CEO Andre de Ruyter recently said electricity is too cheap in South Africa, many people highlighted that the power utility is poorly run and has a bloated workforce.
They cited a 2016 World Bank policy research paper that found Eskom has too many employees.
The researchers found that in 2014, South Africa’s power utility had the largest workforce out of the 39 sub-Saharan African countries – at 41,787.
The World Bank estimated that Eskom only needed a workforce of 14,244 people to serve its 5.4 million customers.
One assumption in the calculation was that there should be one employee for every 413 electricity customers in developing countries.
Eskom was, therefore, 66% overstaffed. The only other countries with higher than optimum staff levels were Zimbabwe (67%) and Zambia (71%).
To build on this research, Daily Investor tracked Eskom’s workforce over the last thirty years using the power utility’s official reports.
In 1990, Eskom had a total workforce of 50,000 employees. In line with technological advances, the company cut its workforce to 30,000 over the next twelve years.
However, from 2002, Eskom started to increase its workforce again, as shown in the chart below.
Daily Investor also tracked Eskom’s electricity production over the same period, which revealed a concerning trend.
It showed that Eskom’s power generation increased between 1990 and 2005 when the company’s employee numbers decreased.
It is not surprising. Technological advances increased efficiencies and created greater output per employee. Maintaining the same level of production therefore required fewer employees.
Between 2005 and 2018, when Eskom’s workforce dramatically increased to a peak of 48,700 employees, Eskom’s power generation did not increase.
From 2005, Eskom’s power generation moved sideways and downward. By 2018, generation declined to 201,400 GWh (Gigawatt hour) – the same level as in 2003.
Power generated per employee
To track the productivity at the power utility, Daily Investor looked at the power generated per employee.
In 2005, Eskom had its most productive year since 1990, generating 7.4 Gwh per employee. It was at a time when Eskom had 31,500 employees.
Fast forward to 2021, and the productivity fell to only 4.5 Gwh per employee.
Profit per employee
Another measure of productivity is to compare the operating profit per employee with the cost per employee.
A productive and cost-effective workforce would generate greater operating profits than it costs the employer.
From 1990 to 2002, when the number of Eskom employees was decreasing, the operating profit per employee was more than the cost per employee.
However, things started to change in 2008 when the cost per employee far exceeded the profit.
From 2012, the gap between the two variables widened, with the operating profit decreasing while the cost per employee continued to increase.
The chart below shows that Eskom’s profit is negatively impacted by its bloated and expensive workforce. It was in a much better situation when it had fewer staff members.
One of the reasons for Eskom’s bloated and unproductive workforce is an aggressive recruitment drive a decade ago to satisfy affirmative action requirements.
Between 2011 and 2013, the number of employees at Eskom increased by 4,488 – from 41,778 to 46,266.
A large number of these additional staff members were employed over a three-month period at the start of 2013.
The rapid employment was not to obtain additional skills but to balance the required affirmative action ratios.
Many departments had to employ many additional employees without proper skills to meet affirmative action targets.
One Eskom manager told MyBroadband that they employed people based on race and gender rather than skills needed by the company.
The result was a bloated Eskom workforce without the required skills to perform their duties.