The long shadow of retrenchments: Are workers under siege?

(Photo by Gallo images/Sowetan/Antonio Muchave)
(Photo by Gallo images/Sowetan/Antonio Muchave)

With 2020 starting off on a fraught economic footing, ordinary South Africans have not been spared: in the first month alone, several companies have already announced their intention to retrench staff in line with Section 189 of the Labour Relations Act. 

Section 189 allows employers to enter into a consultation process to guide retrenchments if the employer can provide compelling reasons to cut jobs.

The Constitutional Court last week determined that it was fair labour practice for employees to be retrenched by an employer, even if that employee was not represented by a union which had been allowed to consult with the employers on the Section 189 process.

Recently Telkom, Samancor Chrome (Glencore's joint venture smelter with Merafe Resources), and Massmart have announced the intention to retrench staff, citing market pressures, financial difficulty, energy constraints and other factors.

Workers bear the brunt

National Union of Metalworkers of South Africa spokesperson Phakamile Hlubi-Majola told Fin24 that the union had been served with notices of retrenchment in terms of Section 189 by Samancor, Glencore and Telkom.

"Management have given reasons, but we have not had the first consultation rounds. Samancor and Glencor have spoken about energy, commodities and the sector. When they present to us in the consultation, they must give us rationale and a financial update," said Hlubi-Majola.

Hlubi-Majola said while it was workers who would have to bear the brunt of the consequences - should the consultation process with employers result in retrenchments - it was the country's broader energy crisis that had played a major role in driving industrial employers to consider job cuts.

'Under siege'

"Workers are definitely under siege. There are various factors we have cited in the past for decisions like these. Eskom is an issue for companies that are very industrial, like Samancor and Glencore. We highlighted last year that Eskom's crisis would have an impact in the long term," said Hlubi-Majola.

The spokesperson said the power utility's troubles had led to tariff increases, which had contributed to rising costs - in turn a contributor towards retrenchments. Tariff increases had been cited, among other factors, when Arcelor Mittal served Numsa notice of retrenchments last year, Hlubi-Majola said.

She said no date had been set for Samancor or Glencore's first round of consultations yet, but that consultation with Telkom had been rescheduled for 5 and 6 February.

Solidarity general secretary Gideon du Plessis told Fin24 that decisions to retrench at companies such as Multichoice, Massmart and Telkom were related to changes in the organisations' respective industries.

"Multichoice and Massmart are [affected] because of the fourth industrial revolution. There is a transfer from data to mobile service. You can already see the impact here and the failure of companies to upskill or reskill employees to work in this new economy," said Du Plessis.

At the time of announcing its retrenchments, Telkom said it was adjusting to a shift in operating conditions, which have seen a significant move from voice to data.

Du Plessis said industrialised companies were showing sharp vulnerability to energy insecurity as well as the cost of energy. 

"We have chrome mines and Glencore, and there we can see how sensitive mining and metals industries are. As soon as you had stage 6 load shedding from Eskom, the impact was immediate. The margins take and knock and a lack of business confidence is devastating," Du Plessis said.

Financially vulnerable state-owned entities are not necessarily immune to job losses either, the union believes. However, he Du Plessis argues, the threat of job losses might in some instances be "blown up" initially.  

"We know that in these consultations, a lot of the figures in terms of jobs at risk are blown up and less than what are ultimately affected. We saw the same thing in Sibanye. In the end, the employer is strategic, because if you have a higher number makes the employer look like they outperformed when it comes to saving jobs," he said.

Du Plessis said investors were anxious for stability in the South African economy, and had been awaiting their cue from government at recent events such as the World Economic Forum in Davos, Switzerland. Investors would also be watching President Cyril Ramaphosa's State of the Nation Address and the Investing in African Mining Indaba in February, he said. 

Economist Mike Schüssler told Fin24 the wave of retrenchments indicated that South Africa was failing to implement the right economic policies and that this would create more uncertainty going forward.

"We have not been able to grow the tax base because of job losses. South Africa is a country that is not growing jobs. We need to create at least 600 000 jobs a year to make way for the new people entering the job market," said Schüssler.

Schüssler said the country's economic position had grown so precarious that South Africa had to choose between cutting expenses in the bloated, still rising public service wage bill and losing jobs in the broader economy.

Meanwhile, Eskom CEO Andre de Ruyter told media on Friday that Eskom would be revising its "maintenance philosophy" in order to ensure greater security of energy supply going forward. "We apologise and we regret the inconvenience caused by load shedding, but we have to fix Eskom. We have to do what needs to be done," he said. 

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