Eskom’s Employee Costs to Produce the Same Amount of Electricity Increased by 1,195% Since 1994

Why It Matters

The exploding employee‑cost per unit highlights deep structural inefficiencies that threaten South Africa’s power affordability and economic stability. Persistent under‑performance despite higher spending signals urgent need for reform at Eskom.

Key Takeaways

• Employee cost per GWh jumped from $966 (1994) to $12,500 (2025).
• Payroll grew to $2.45 bn while generation fell 15 years ago.
• Energy Availability Factor stalled at 61%, far below 90% goal.
• Diesel‑generation spend dropped to $346 m, yet prices rose 987% since 2007.

Pulse Analysis

Eskom’s soaring labor expense per megawatt‑hour is more than a bookkeeping anomaly; it reflects a utility grappling with legacy contracts, over‑staffing, and a compensation structure that outpaces productivity. When the cost to produce a GWh rose from under $1,000 to over $12,000, the gap far exceeded inflation and signaled that each additional employee added marginal output. This inefficiency feeds directly into tariff hikes, which have nearly tenfolded since 2007, squeezing disposable income for South African households already burdened by high inflation.

The operational metrics tell a parallel story. While Eskom proudly announced a full year without load‑shedding, its Energy Availability Factor—a key indicator of grid reliability—remained stuck around 60%, well below the 90% benchmark it set a decade ago. The modest improvement in unplanned outage rates masks a deeper issue: the utility’s generation capacity has contracted relative to its workforce, and reliance on costly diesel backup, though reduced, still underscores systemic fragility. Analysts warn that without a decisive overhaul of staffing levels and wage structures, the utility’s ability to meet future demand will be compromised.

For investors and policymakers, Eskom’s cost trajectory serves as a cautionary tale about state‑owned enterprises where political patronage and procurement scandals inflate expenses. The stark contrast between declining diesel spend and soaring tariffs suggests that price increases are driven more by internal inefficiencies than external fuel costs. Addressing the root causes—streamlining the payroll, tightening procurement, and aligning EAF targets with realistic operational plans—could stabilize tariffs and restore confidence in South Africa’s power sector. The window for meaningful reform narrows as the economy depends increasingly on reliable, affordable electricity.