Unions are preparing for the worst as businesses indicate that the worsening load-shedding crisis could force them to cut shifts, forego wage hikes and even slash jobs.
Unions, the government and employers said the escalating energy crisis will probably deal a bigger blow to business and employment than the national Covid lockdown did in 2020.
Minister of small business development Stella Ndabeni-Abrahams said the department was working to find solutions for the impact of load-shedding on small and medium enterprises (SMEs) that cannot afford alternative power sources.
Ndabeni-Abrahams said a study by the Small Enterprise Finance Agency (Sefa) found that 71% of respondents had suffered harm because of load-shedding and required alternative power sources to continue operations.
“Our aim is to find immediate solutions that can be urgently effected to avoid disastrous consequences, such as closures of small businesses and job losses in the SME sector. This sector was devastated and is still barely recovering from the ruinous effects of Covid-19. We cannot afford losing more businesses and jobs,” she said.
The minister said she had instructed Sefa and the Small Enterprise Development Agency to develop an energy relief package for the small, medium, informal and micro sectors to soften the blow of load-shedding.
Solidarity general secretary Gideon du Plessis said employers had told the union load-shedding and higher electricity tariffs meant they had to curb or cancel wage hikes and possibly retrench workers.
We anticipate that if nothing changes, [in terms of load-shedding], there will be attempts to retrench
— Cosatu spokesperson Sizwe Pamla
Du Plessis said the union had established an internal recruitment company to assist its members for free to find new jobs if they were retrenched.
Cosatu spokesperson Sizwe Pamla said: “We anticipate that if nothing changes [in terms of load-shedding], there will be attempts to retrench. In the meeting we had with the president as labour federations, we demanded a joint meeting between the government, labour and employer associations to discuss and adopt a moratorium on retrenchments over load-shedding and focus on finding an urgent solution.”
Cosatu general secretary Solly Phetoe said load-shedding affected workers as well as employers. “The increase in tariffs affects workers and increases the cost of living. The issue of employers using the energy crisis to reduce workers is not something Cosatu would agree to.”
Mametlwe Sebei, spokesperson for the General Industrial Workers Union of South Africa, said sectors in which the union organises had not recovered from the Covid lockdown. He said union members in the hotel, hospitality and food production industries had lost their jobs.
“We were actually dealing with retrenchments for the past three years and it has been getting worse. The issue of load-shedding was a feature in many of these retrenchments. In the industries where we organised, they were heavily affected by Covid-19, but the reason they have not reopened is load-shedding, despite the relaxation of the lockdown,” said Sebei.
He said intensified load-shedding meant workers had to work odd hours and were not compensated for the times when power cuts halted operations, because companies said they could not pay wages for periods of zero production.
Load-shedding has affected even big businesses that have the means to provide some, if not all, their power through alternative sources. For example, some mining companies with energy-intensive smelting operations have to suspend these as part of load curtailment agreements with Eskom.
StatsSA data released this week showed mining production fell a further 9% in the year to November. Investec warned that load-shedding continued to crimp the sector’s production capacity.
“Domestically, persistent, heightened load-shedding continues to weigh heavily on the energy-intensive mining sector and remains a key downside risk to the country’s growth potential,” Investec said in a note on the mining data.
Ferro Alloys Producers Association chair Nellis Bester said smelters needed to operate on a 24/7/365 basis to be most economical and load shedding had resulted in smaller smelting facilities incurring additional costs of running generators.
“Any curtailment or load shedding event, implies a loss of production capacity which in turn results in lower sales and thus less revenue.”
Manufacturing Circle CEO Philippa Rodseth said power tariff increases raised operating costs for manufacturers and the unreliable supply jeopardised revenue because production time, and sometimes customer orders, were lost.
If manufacturers are unable to produce products competitively, for domestic consumption and for export, we see a significant risk to our industry and to the South African economy
— Manufacturing Circle CEO Philippa Rodseth
“If manufacturers are unable to produce products competitively, for domestic consumption and for export, we see a significant risk to our industry and to the South African economy,” said Rodseth.
She said Manufacturing Circle member companies are looking to off-grid solutions to reduce energy costs and improve competitiveness. However, in the short term, revenue losses caused by load-shedding and unreliable supply would lead to higher prices and in some cases companies would go out of business.
Jaco Minnaar, president of Agri SA — which represents about 17,000 commercial farmers — said most crops were in the middle of their growing season and load-shedding was disrupting irrigation. This was of particular concern because of the heat.
“At this time, [farmers] usually irrigate between 20 hours and 24 hours a day and with stage 6 they can only manage 14 hours. It is a great deficit in water and that has an effect on the crops, especially in terms of yield.”
Minnaar said Western Cape farmers were harvesting peaches and other fruit that were temperature sensitive.
“When they are picked, they need to be cooled down and kept at that temperature until they reach the supermarkets. With this kind of load-shedding it is difficult to maintain the cold chain, and that could affect the quality of the produce.”
He said poultry processing plants could run at only 50%-60% of capacity. “It’s not that there is not enough chicken, but they cannot store it.”
The South African Poultry Association said 10-million chickens had had to be culled because of load-shedding.
Minnaar said stage 6 loadshedding might not affect jobs in the short term, but that would change if it persisted.
“What we are seeing in the short term is that the shifts [that people work] are moving. You now have to work when you have power. We see it even with the irrigation farmers, but also with the manufacturers, they are moving shifts around to accommodate the load-shedding.”
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