French-style labour deal poised to fuel South Africa inflation

The South African State-owned power utility’s inflation-beating pay deal struck with protesting workers sets a dangerous precedent for on-going public-sector wage negotiations that may add to price pressures and weigh on state coffers, according to S&P Global Ratings. Eskom Holdings this week signed a one-year deal with three labour groups for a 7% pay hike and an increased monthly housing allowance. While the agreement ended illegal and violent protests that deepened electricity outages in Africa’s most industrialized economy, it will add more than 1 billion rand ($59 million) to the cash-strapped utility’s wage bill for the next 12 months. Eskom, which relies on government support to keep operating, said it will struggle to afford that.