Eskom’s Employee Cost Per Unit of Electricity Surges More Than 1,400% Since 1994

Rising labour costs and declining electricity output have pushed Eskom’s employee cost per kilowatt-hour to record levels, raising concerns about efficiency and future electricity tariffs.

Eskom’s employee cost per kilowatt-hour (kWh) of electricity generated has increased dramatically over the past three decades, climbing from 1.79 cents per kWh in 1994 to 27.25 cents per kWh in 2026.

The increase of 1,422% highlights the growing gap between the utility’s labour expenses and the amount of electricity it produces, placing renewed focus on Eskom’s operational efficiency and financial sustainability.

Employee cost per kilowatt-hour is widely regarded as an important performance indicator within the power generation industry. It measures how much a utility spends on staff costs for every unit of electricity produced.

Generally, a lower ratio indicates higher productivity and efficiency, while a rising ratio can signal increasing costs, declining output, or both.

Eskom’s Efficiency Declines Over Time

In 1994, Eskom generated approximately 160,293 gigawatt-hours (GWh) of electricity while recording a total employee bill of R2.868 billion.

This translated into an employee cost of just 1.79 cents per kilowatt-hour, reflecting a period when the utility was widely regarded as one of the world’s most efficient electricity producers.

Throughout the late 1990s and early 2000s, labour costs per unit of electricity remained relatively low, gradually increasing to 3.68 cents per kilowatt-hour by 2003.

This period coincided with stable operations, strong generating performance and growing electricity output.

Load Shedding Era Changes the Picture

The trend shifted significantly during the years that followed as Eskom faced increasing operational challenges.

The onset of load shedding, growing maintenance backlogs, governance failures and corruption allegations placed immense strain on the utility’s performance.

Between 2009 and 2017, Eskom’s employee cost per kilowatt-hour more than doubled from 6.60 cents to 15.08 cents.

The increase was driven by factors including workforce expansion, annual salary increases and rising overtime expenses.

During the same period, electricity generation struggled to keep pace with rising operational costs.

Temporary Stabilisation

Between 2017 and 2023, Eskom managed to slow the growth of labour costs per unit of electricity.

This was largely attributed to cost-containment measures, limits on executive incentives and efforts to reduce staff numbers.

While the ratio remained elevated, it showed signs of stabilisation compared to the rapid increases seen during earlier years.

However, this trend proved short-lived.

Sharp Rise Under New Leadership Period

Between 2023 and 2026, employee costs rose sharply once again.

The utility introduced significant salary increases across various employee levels, expanded performance-related compensation and reinstated short-term incentive schemes.

At the same time, electricity production failed to increase sufficiently to offset the higher expenditure.

As a result, employee cost per kilowatt-hour jumped from 16.88 cents in 2023 to 27.25 cents in 2026, representing an increase of approximately 61% within just three years.

Lower Production, Higher Headcount

One of the most concerning aspects of the trend is that Eskom’s electricity generation declined despite higher labour costs.

Electricity production reportedly fell from 195,702 GWh in 2025 to 184,966 GWh in 2026.

Over the same period, the utility’s workforce increased by 1,244 employees.

Employee costs also rose significantly, increasing from R45.4 billion to R50.4 billion.

This combination of declining output and rising costs has intensified concerns about the utility’s long-term sustainability and operational effectiveness.

Impact on Consumers

Energy analysts frequently point to escalating operational costs as one of the major drivers behind electricity tariff increases.

When labour and operating expenses rise faster than electricity production, utilities often seek higher tariffs to recover costs and maintain financial stability.

For South African consumers and businesses already facing rising electricity prices, the latest figures are likely to add to concerns about affordability and Eskom’s ability to improve productivity while maintaining reliable power supply.

As South Africa continues to address challenges in the energy sector, improving operational efficiency remains one of the key issues likely to dominate discussions about Eskom’s future.