Tag: retrenchments

By Londiwe Buthelezi for News24

One of South Africa’s new banking challengers, African Bank has joined a long list of companies who have to let go of their staff because of Covid-19.

African Bank announced on Tuesday that it has started retrenchment consultation processes with the banking sector union, Sasbo. The bank anticipated that the Section 189A consultations will affect 1 269 of its 3 728 employees.

The bank said it anticipates a job loss ratio of approximately 25% of those number affected meaning that ultimately around 317 people or 8% of its staff members may be out of jobs at the end of these consultations.

“The Covid-19 outbreak and the associated protracted lockdown intensified the dire state of the economy. Given the financial pressure faced by our customers the bank has recorded a reduction in sales as well as collections, which has created excess capacity across the different business units,” wrote the bank in a statement on Tuesday afternoon.

The bank had just entered the transactional banking space in 2019, trying to diversify its revenue streams beyond investments and loans that it was traditionally known for.

But the state of its lending book took the limelight away from the new venture in this year’s interim results when the bank announced that it had already experienced a 25% reduction in debt collections.

But on Tuesday, African Bank said the automation of its businesses processes also played a role in considering retrenchments. The gradual automating of certain tasks and customers increased usage of digital by customers had led to staff redundancies. In 2019, African Bank CEO, Basani Maluleke said the bank was training an army of 29 data analysts who would join the bank earlier this year and help it accelerate its digital banking game.

But African Bank was still adamant that there will always be a space to grow brick-and-mortar branches as it opened a new branch in Sandton City at the time.

However, on Tuesday, African Bank said the Covid-19 impact and the redundancies created by digitisation have made it imperative to restructure its operations and hence enter into consultations which may lead to the loss of jobs.

“We have been deliberate in reducing costs in all areas of our business. The undertaking of a consultation process with our employees is the last resort to further reduce costs. Our intention throughout the process will be to consider appropriate measures to avoid and minimise potential job terminations,” said Maluleke in the statement.

She added that the bank’s services to customers will not be affected by the retrenchments.

 

By Admire Moyo for IT Web

JSE-listed technology services firm Altron is selling its building that housed subsidiary Altron Document Solutions in Isando, Johannesburg, and is retrenching employees from the business unit.

The company says the printing unit was negatively impacted by the COVID-19 pandemic, which resulted in a massive drop in the printing business.

Altron Document Solutions describes itself as “the world’s largest Xerox distributor and Africa’s leading technology and services company”.

It markets and services the complete range of Xerox document equipment, software solutions and services to 26 Sub-Saharan Africa countries.

However, the business was hit by the COVID-19 pandemic, leading the Altron Group to sell the Altron Document Solutions building.

“The demand for printing services has declined by about 45% due to COVID-19, and this, unfortunately, led us to retrench 73 people in Altron Document Solutions,” Zipporah Maubane, Altron spokesperson tells ITWeb.

“With fewer people in the Altron Document Solutions team, we now don’t require as much space, so we are selling the building and are looking for an appropriate space elsewhere for our colleagues in that business. We have owned the building for over 40 years,” she adds.

Since Mteto Nyati took over as CEO of Altron in 2017, it has been selling off some non-core businesses.

Nyati announced the company disposed of its last non-core asset Altech UEC, a set-top manufacturing business, to Skyblu Technologies, in January last year.

In its financial results for the year ended 21 February, Altron posted an increase in earnings before interest, taxes, depreciation and amortisation of 14% to R1.8 billion, while revenue increased 6% to R16.7 billion during the same period.

However, at the time, Nyati told ITWeb in an interview that COVID-19 was expected to have a negative impact on its business in the year ahead.

The company went on to introduce a raft of measures to save R500 million in costs in anticipation of a dip in revenue as a result of the coronavirus. Some of the measures included salary freezes and bonus cuts.

Altron’s move to sell its Isando building comes as it in May said it had set aside R300 million to complete its new Woodmead office campus announced last year.

Last year, Altron signed a rental contract with Growthpoint Properties for a 29 000-square metre head office in Woodmead.

Commenting on the Altron building sale, Derrick Chikanga, an analyst at Africa Analysis, says like other devices businesses, the printing business was negatively affected by the COVID-19 pandemic and the subsequent lockdown that was enforced by most countries.

He points out that most South African printers originate from European markets, while printer components are mostly manufactured in Asian markets.

“As such, the COVID-19 pandemic had an adverse impact on the entire global supply chain, thereby negatively impacting the local printing industry,” says Chikanga.

He points out that the work-from-home policy that was adopted by most companies since the onset of the pandemic has also hugely impacted demand for printers by large corporates.

“Most local distributors focus little attention on small office or home office devices, with their primary focus being on enterprise-grade printers. Hence, since most businesses are still enforcing remote work policies, demand for large format printers has been hugely affected.”

Nonetheless, Chikanga believes the industry will recover as businesses resume operations and some employees return to their offices.

“While the work-from-home policy might continue into the future, not all companies and employees are able work efficiently from home.

“Working from home also incurs additional costs to companies, such as Internet connectivity costs. Hence, while the industry might not recover to its original level, some restoration to production in the printing industry should be expected,” he concludes.

By Londiwe Buthelezi for News24

Troubled clothing retailer Edcon says the reason it sent retrenchment notices to all its staff is because it has not received any binding offers from people interested in buying the company or any of its divisions.

The retail group’s executive of corporate affairs and communications Vannie Pillay said the company sent Section 189 retrenchment notices to 22 000 workers, meaning that jobs of everyone employed by the retailer are on the line – as the owner of Edgars and Jet has approximately 17 000 people employed on full-time basis and about 5 000 seasonal workers.

“We did send notices to all our staff as per the LRA [Labour Relations Act] because we have no binding offers that have been received at this stage. So, it’s the prudent thing to start consultations in terms of Section 189,” said Pillay.

Biggest retrenchment plan yet

Edcon’s move makes it be the biggest retrenchment plan yet that any local company has announced during the lockdown, blaming it on the coronavirus-induced restrictions. For instance, the national carrier, SAA which is also in business rescue said 4 708 jobs were affected when it started retrenchment consultations in March.

Edcon said before going into voluntary business rescue in April that the lockdown caused it to lose about R2-billion in sales and did not see any other way out of its woes. But in the business rescue plan that Edcon published on the 9th of June, its business rescue practitioner (BRPs) envisaged that employees would be transferred to potential buyers of Edcon businesses. At the time, the plan said only unavoidable retrenchments would take place if there are remaining employees who were not absorbed by the buyers after the accelerated sales.

The plan said there was no conclusion to be drawn that people working in “non-viable” stores would “definitely” be retrenched. The BRPs were supposed to get final offers from businesses and parties interested in buying Edcon’s divisions by the end of June and finalise successful bids by early July 2020.

Therefore, it was expected that the extent to which the company would be able to retain jobs would become clearer then. But the business rescue plan did budget R597-million for proposed retrenchments of employees whose jobs the BRPs might not be able to save.

Source: MyBroadband

While the impact of COVID-19 on IT and telecoms companies is not as severe as many other industries, these industries are still faced with big challenges because of the downturn in the economy.

ICT companies which have a lot of exposure to the travel, tourism, and restaurant industries, for example, have to deal with a significant loss in revenue.

One of these companies is Adapt IT, which said the negative impact of the lockdown on its clients in the hospitality sector has resulted in 20% of its employees being unable to work or perform their regular duties.

The poor forecast of the hospitality sector has forced Adapt IT to consider staff cuts, and it is currently in a consultation process with 4% of its permanent staff who may be affected.

Altron COO Andrew Holden told MyBroadband they have had to effect temporary layoffs due to the inability of some customers to pay for services as their businesses had been affected by the lockdown.

“Where possible, Altron will seek alternative opportunities for affected employees within the group. Retrenchments are a last resort, and will be limited as far as possible,” said Holden.

Many other large tech companies like Altron, Dimension Data, Blue Label, and Alviva have also indicated that staff cuts may be necessary in the event of a prolonged economic downturn.

Salary cuts
Many South African IT companies had to implement salary cuts to mitigate the financial impact of the lockdown.

Salary cuts in the IT industry were necessary for two main reasons:

Many clients stopped paying because of the impact of the lockdown on their businesses.
Employees could not work because their clients had to close their businesses during lockdown.
In April, EOH CEO Stephen Van Coller announced that the company’s executive committee would take a salary reduction of 25%, with other staff taking a 20% pay cut.

This was needed because of the anticipated drop in payments from clients and future uncertainty on the full impact of COVID-19 on the economy and the company.

Cell C also implemented salary cuts and used the COVID-19 TERS Relief Funds to cover the shortfalls for those employees to the extent provided by the UIF.

Alviva told MyBroadband there were no mass pay cuts at the company, but that it had to implement salary reductions in a few isolated cases.

Altron followed a different approach to ensure the sustainability of the company. Instead of cutting salaries, it reversed all salary increases granted as of 1 March.

Good news for the telecoms industry is that very few of the large mobile operators and ISPs had to implement salary cuts during the lockdown.

Vodacom, MTN, Telkom, Liquid Telecom, Rain, Afrihost, Cool Ideas, and Cybersmart said they have not implemented any salary cuts during the lockdown.

The outlook for the South African ICT industry
While many large IT and telecoms companies were able to prevent retrenchments, they warned that the full impact of COVID-19 may result in staff cuts in future.

Alviva said the full impact of the COVID-19 pandemic on the economy and the company will inform their decision regarding future staff cuts.

Blue Label echoed this view. “Should the lockdown persist indefinitely, and economic conditions continue to adversely impact ourselves and our customers, hard decisions regarding retrenchments will have to be made,” the company said.

Dimension Data told MyBroadband should the need arise to reduce its workforce to ensure sound and responsible fiscal management, it would be done only after exhausting all possible alternatives.

“We will always take a long-term view of the market opportunities, trends, economic outlook, and investment and spend forecasts and put them in the context of our strategy and vision before making any decisions,” Dimension Data said.

Telkom said while it has not cut any salaries at this stage, it is still studying the impact of the virus and the lockdown on the business.

Telkom has announced that it has reduced costs on its retrenchment exercise by R300-million due to the nationwide lockdown.

  • The restructuring process has been reduced from R1.5-billion to almost R1.2-billion
  • According to an ITWeb article, “preserving cash and maintaining a flexible balance has become of utmost importance and urgent during the COVID-19 pandemic as the economy is under strain”
  • In January, Telkom announced 3 000 jobs will be cut
  • In 2019, Telkom said it cut over 2 000 jobs in 2018 and reduced permanent staff by 12.5%
  • Telkom yesterday revealed it will not be able to finalise annual results on time
  • Telkom said it is in agreement with the government on its efforts to fight COVID-19 and also supports government initiatives to curb the spread of the virus.

Over 9 000 jobs to be cut in SA

The first two months of the new year have seen a number of South African companies give notice to retrench workers – a move which will result in more than 9 000 people losing their jobs.

Below are some of the companies who are looking to downsize their workforce:

Telkom

  • Telkom informed trade unions and staff that it could cut up to 3 000 of its more than 15 000 employees
  • The company is struggling with declining performance in the face of competition
  • The Federation of Unions of South Africa (FEDUSA) has highlighted that overall job cuts at Telkom in 2020 could be around 6 000 jobs

Samancor 

  • Mining company Samancor Chrome said it could cut close to 2 500 jobs in response to weak chrome prices and power supply problems
  • The job cuts would apply to its Eastern and Western Chrome mines
  • It cited Eskom’s power supply problems and increased electricity tariffs as reasons for the jobs cut

Dion Wired/Massmart 

  • Massmart plans to shutter the 23-store Dion-Wired chain of hi-tech appliance shops and 11 Masscash wholesale outlets
  • This will affect 1 440 employees of 12 000
  • Massmart is suffering from an earnings slump due to declining consumer traffic in malls and low consumer confidence, which has affected sales of high price-ticket electronic items

Sibanye-Stillwater

  • The mine has reportedly retrenched 1 142 employees, well below the initial anticipated retrenchment figure of 5 270 jobs
  • The mining company employs 88 000 people across South Africa
  • The retrenchments follow the Section 189 restructuring at its Marikana operation, which has suffered losses since the shooting in 2012

Glencore

  • Glencore issued section 189 notices to 665 employees
  • The retrenchments centre around the mine’s Rustenburg Smelter
  • The group has cited the high cost of electricity and an increase in the carbon tax and logistics costs as reasons for downsizing

Aspen

  • Aspen Pharmacare said it plans to cut up to 219 jobs at its Port Elizabeth and East London plants
  • The drugmaker is disposing of non-core assets to manage its debt burden as it seeks to remain globally competitive

Telkom plans to cut 3 000 jobs

By Sibongile Khumalo for Fin24

Telkom has issued a notice to cut as many as 3 000 jobs – nearly a third of its workforce – across multiple departments, as the company looks to streamline its operations amid falling earnings and changing market conditions.

Trade union Solidarity, which is one of the unions representing workers, said a notice of the process – which would be conducted in two phases – was received on Wednesday.

“We expected the retrenchments to happens but not in such large numbers. This is quite a large number… we did not expect it,” said Linda Senekal, the union’s sector coordinator.

She said affected workers include those employed in the IT department, customer services and small business.

With a 9 000-strong workforce, Telkom is adjusting to a shift in operating conditions, which have seen a significant move from voice to data.

The semi-privatised company, which operates in several countries in Africa, has also faced calls by Independent Communications Authority of South Africa to drop data costs.

Senekal voiced concern that the company had opted to lay off workers instead of opting to upskill employees for tech-driven jobs.

“Telkom employs a lot of contractors to do jobs that should be done by its workforce,” Senekal said.

The company’s interim financial results, released in November, showed that headline earnings dived 36%, while net debt increased by almost R2bn to R11.8bn.

Telkom is among several large organisations considering job cuts as the country battles high unemployment rates and tough economic conditions.

Last year, debt-stricken national airline, SAA, announced plans to reduce head counts, in a move which was fiercely opposed by unions.

This week, MassMart, which owns Game, DionWired and Makro, among others, announced on Monday that it was consulting with its employees about the potential closure of 34 stores. The move could affect up to 1 440 employees.

By Babalo Ndenze for EWN

Parliament wants the government to find a way to stop the pending retrenchments at retail giant Massmart.

Mandla Rayi, chairperson of the Select Committee on Trade and Industry, Economic Development, Employment and Labour called on those departments to urgently intervene.

Massmart, which is majority-owned by US retail giant Walmart, has this week indicated it had started consultations with unions about the closure of up to 34 of its Dion-Wired and Masscash stores which could affect 1 400 employees.

Rayi said that it might not be ideal for the government to interfere in business but the severity of the pending retrenchments necessitated some form of intervention.

“We would like to have a meeting with the departments of employment and labour and DTI, with them telling us how far they’ve gone with regards to their intervention in this matter.”

He said that it was the very same government that facilitated the American owned Massmart’s entry into the South African economy.

“Remember when Massmart, an American company, wanted to come to South Africa, government was involved in facilitating their coming into the country, so we want them to get involved over the pending retrenchments.”

He said that the select committee would request a meeting with the departments of employment and labour as well as the trade and industry department to try to find solutions.

Retrenchments loom at SAA

Source: eNCA

South African Airways (SAA) has informed its more than 5,000 employees that it’s restructuring. It is estimated that about 944 staff will be affected – nearly 20% of the workforce.

The national carrier has had its fair share of financial turbulence.

But in the mid-term budget, Finance Minister Tito Mboweni announced that the state would pay off the airline’s R9.2-billion debt over the next three years.

The airline has incurred over R28-billion in cumulative losses over the past 13 years.

The South African Society of Bank Officials (Sasbo) has vowed to shut down all digital banking platforms on Friday, according to an article published by ITWeb.

South Africa’s largest financial union has threatened the country with a complete blackout of transactional services, including cash withdrawals, in response to the increase in digitalisation and job losses in the sector.

South African banks have been advising their customers to use online banking platforms on Friday.

However, Sasbo general secretary Joe Kokela told ITWeb in an interview: “Whatever the banks say, it’s their right; I can only speak on behalf of Sasbo and say the digital platforms will be affected. Those services are all controlled by human beings to be able to perform a function. Our argument is that these services will be affected on Friday.”

Sasbo hopes the single day of industrial action will mitigate the retrenchments that have become common in the sector.

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