Wage talks aggravate South Africa’s Eskom reform woes

Significance The contest over wages is a proxy for unions’ broader resistance to the turnaround plan to address Eskom’s parlous financial and operational situation. The outcome will affect this broader battle. Impacts Any above-inflation wage increase will have a knock-on effect on Eskom’s debt. The talks’ outcome may influence other standoffs between government and unions representing public servants and state-owned enterprises. Recently improved macroeconomic performance, driven by rising commodity prices, will likely reinforce union demands across all these talks.

Do Operating Profits Induce a Wage Premium Equally Shared among Employees Earning High or Low Incomes?

Panel data show that between 2001 and 2014 Norwegian industries’ increasing aggregated operating profits per employee increased average wages and wage inequality. The data imply that increasing profits, perhaps unsurprisingly, induce a wage premium. The data further imply that employees earning high incomes at the outset had the highest wage increase percentage-wise. Decreasing operating profits per employee had opposite but less robust effects on average wages and wage inequality. Panel data Granger causality tests finally showed that average wages, but not wage inequality, reversely and positively affect operating profits per employee.