The South African Post Office is facing significant downsizing, with plans to cut 6,000 jobs out of its total of 11,038 employees due to escalating debts and a decline in revenue. The Communication Workers Union is concerned that the Business Rescue Plan, which prioritizes creditors over employees, may not comply with Independent Communication Authority of South Africa regulations. Additionally, the Post Office has been defaulting on transferring employee pension fund deductions to the Post Office Retirement Fund since April 2020, exacerbating the situation. The future of the organization and its employees is uncertain.
The South African Post Office is set to downsize by cutting 6,000 jobs following its provisional liquidation in July due to escalating debts. The Business Rescue Plan aims to eliminate 6,000 jobs out of its 11,038 employees while safeguarding the remaining 5,038 jobs. The Communication Workers Union argues that the plan prioritizes creditors over employees and questions its compliance with Independent Communication Authority of South Africa regulations. The Post Office’s defaulting on transferring employee pension fund deductions to the Post Office Retirement Fund since April 2020 further exacerbates the situation.
The Desperate Measure of Downsizing
The South African Post Office (SAPO), confronting a deepening crisis, is bracing itself for a considerable downsizing that might see more than half of its present employee base, or close to 6,000 workers, being jobless by the end of March. The Communication Workers Union (CWU), which represents over one-third of the total workforce, is putting its best foot forward to restrict the extent of this significant reduction in personnel.
SAPO’s Business Rescue Plan
The strategy for job cuts, detailed in the Business Rescue Plan (BRP) released last November by Business Rescue Practitioners Anoosh Rooplan and Juanito Damons, is the most recent predicament in a chain of unfortunate incidents for SAPO. The organization was thrust into a business rescue operation in July, subsequent to its provisional liquidation triggered by escalating debts. The creditors were inclusive of landlords whose rents had been in arrears for a substantial period.
According to the BRP, SAPO is under a debt of R4.5-billion, a significant portion of which is owed to the Postbank and a considerable amount around R400-million relates to pending rent. The operational losses are ascribed to a decline in revenue and an untenable cost structure. With the lion’s share of its expenses being dedicated to salaries and wages, the Post Office is spending R1.50 for every rand it generates in revenue.
Status of SAPO’s Operational Branches
As of July, when the business rescue operation began, SAPO had 894 operational branches. However, a mere 113 of these were generating profits. This followed the closure of a staggering 384 branches since the financial year 2022. Adding to the conundrum, many of these closures happened unexpectedly, resulting in an excess of approximately 815 workers.
Impact on SAPO’s Workforce
The BRP states that the retail staff is the most affected by the retrenchments, with around 3,000 jobs standing at risk. Additionally, close to 275 drivers, roughly 200 workers on prolonged sick leave, and three top-tier positions are also part of the retrenchment plan. The remaining job redundancies are projected to affect district manager positions, and postal service men and women.
The BRP aims to downsize the number of branches to 600, thus eliminating 6,000 jobs out of the total 11,038 employees. Nevertheless, the business rescue practitioners contend that their plan will safeguard the remaining 5,038 jobs that would be otherwise lost if SAPO were to face liquidation. The successful execution of this plan is contingent upon securing a remaining R2.4-billion allocation and an additional R3.8-billion in equity funding from the National Treasury.
CWU’s Response to the Rescue Plan
However, the CWU has expressed skepticism regarding the rescue plan, arguing that it prioritizes creditors over employees. CWU collective bargaining coordinator, Nathen Bowers, expresses his concern that the plan will lead to a substantial number of job losses. He points out the specific regulations imposed by the Independent Communication Authority of South Africa (ICASA) regarding the number of Post Office branches in an area in relation to its population size. The Union is probing how the projected job cuts align with these regulations.
Bowers underscores the importance of the Post Office, especially in rural areas. He attributes the provisional liquidation of the Post Office and the subsequent rescue plan to mismanagement. He refers to the findings of corruption in the Post Office by the Public Protector in 2016, which revealed an irregular appointment of labor brokers between 2002 and 2012, causing the Post Office to incur costs of R2.7-billion during that period.
SAPO’s Troubles with Pension Funds
Adding to the bleak scenario, the Post Office has been defaulting on transferring employee pension fund deductions to the Post Office Retirement Fund since April 2020. This is in spite of a judgment by the Supreme Court of Appeal (SCA), directing SAPO to pay the arrears and interest of the retirement fund.
In the midst of this turmoil, employees who opt for retrenchment receive compensation for their retirement fund deductions. However, they are not receiving the interest accumulated over the last three years. Additionally, the employer’s contribution to the retirement fund, supposed to be 13.5% of their salary, is devoid of the interest it should have accrued.
The challenges faced by the South African Post Office and its workforce are daunting. While the practitioners are confident that their BRP is the sole solution to rescue the sinking organization, the CWU remains apprehensive. Amid these unstable times, the future of the South African Post Office and its numerous employees hangs by a thread.
1. Why is the South African Post Office downsizing?
The South African Post Office is downsizing due to escalating debts and a decline in revenue, causing the organization to face a deepening crisis. The Business Rescue Plan aims to eliminate 6,000 jobs out of 11,038 employees while safeguarding the remaining 5,038 jobs.
2. Who is responsible for implementing the Business Rescue Plan?
Business Rescue Practitioners Anoosh Rooplan and Juanito Damons are responsible for implementing the Business Rescue Plan.
3. How much debt is the South African Post Office under?
The South African Post Office is under a debt of R4.5-billion, a significant portion of which is owed to the Postbank and a considerable amount around R400-million relates to pending rent. The operational losses are ascribed to a decline in revenue and an untenable cost structure.
4. What is the impact of the downsizing on SAPO’s workforce?
The retail staff is the most affected by the retrenchments, with around 3,000 jobs standing at risk. Additionally, close to 275 drivers, roughly 200 workers on prolonged sick leave, and three top-tier positions are also part of the retrenchment plan. The remaining job redundancies are projected to affect district manager positions, and postal service men and women.
5. What is the Communication Workers Union’s response to the rescue plan?
The Communication Workers Union (CWU) has expressed skepticism regarding the rescue plan, arguing that it prioritizes creditors over employees. The Union is probing how the projected job cuts align with regulations imposed by the Independent Communication Authority of South Africa (ICASA) regarding the number of Post Office branches in an area in relation to its population size.
6. What is the South African Post Office’s trouble with pension funds?
The South African Post Office has been defaulting on transferring employee pension fund deductions to the Post Office Retirement Fund since April 2020, despite a judgment by the Supreme Court of Appeal (SCA) directing SAPO to pay the arrears and interest of the retirement fund. This has caused employees who opt for retrenchment to not receive the interest accumulated over the last three years and for the employer’s contribution to the retirement fund to be devoid of the interest it should have accrued.
