Cape Town – The proposed 19.9% electricity hike by Eskom will result in job losses in the steel and engineering sector, warned an economist for the Steel and Engineering Industries Federation of Southern Africa (Seifsa).
Seifsa, which strongly opposes Eskom’s application for electricity tariff increases, is set to make a representation at the National Energy Regulator of South Africa (Nersa) hearings in Midrand on Monday.
“It will worsen the plight of the ailing metals and engineering sector,” said Seifsa CEO Kaizer Nyatsumba.
The sector has already lost a total of 25 000 jobs in the three years between July 2014 and June this year, Nyatsumba wrote in Fin24 sister publication Finweek in September.
“Job losses at that scale move SA away from the goals and objectives of the National Development Plan (NDP), which proposes the creation of 11m jobs by 2030 through, among others, the promotion of employment in labour-absorbing industries.”
Seifsa chief economist Dr Michael Ade said a high electricity tariff increase will stifle output in the metals and engineering sector.
He said the metals and engineering sector’s share in manufacturing output is nearly 30%. It contributes approximately 3.6% of the gross domestic product to the South African economy.
If the tariff increase application goes through, it will be a critical setback for the sector’s productivity, said Ade.
The sector provided employment to around 480 000 people directly last year, said Ade, adding that these jobs will be placed in jeopardy.
“An inevitable consequence of the proposed 19.9% hike by Eskom will be more job losses.”
Ade said that if Nersa felt that an increase for Eskom was necessary, then it should be at a much lower percentage than requested.
Seifsa has a combined membership of 1 600 companies, ranging from giant steel-making corporations to micro-enterprises employing few than 50 people.