JOHANNESBURG, June 25 (Reuters) – South African power utility Eskom said on Friday that it would implement a 1.5% salary increase from July 1 and adjust some employee benefits, defying union demands for a far larger hike and opposition to the changes.

Wage talks between the unions and Eskom, which is struggling to power Africa’s most industrialised nation and is choking under a mountain of debt, ended this month without agreement and arbitration is yet to start.

Eskom’s offer is dependent on savings from benefits including overtime and travel, where the state-owned utility says it has found “excesses”.

Unions rejected the offer after demanding increases of between 9.5% and 15%, well above South Africa’s current level of annual inflation of around 5%.

A previous pay dispute in 2018 led to electricity supply interruptions, and Eskom has warned the same could happen again.

Eskom said in Friday’s statement that its salary offer would allow it to protect jobs and manage risks to its sustainability.

“The generation, distribution and transmission of electricity are classified as essential services. Eskom employees are therefore legally prohibited from participation in unlawful industrial action,” it added.

Eskom’s three main unions, the National Union of Mineworkers, the National Union of Metalworkers of South Africa and Solidarity, are yet to respond to the latest development. (Reporting by Alexander Winning; Editing by Alexander Smith)

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