Salary cuts or no income at all.
That’s the reality many South Africans are facing throughout the country, and company after company is slashing salaries from executive level down to workers. Hefty cuts announced over the last few days include ArcelorMittal, Woolworths, Pam Golding and Independent Media.
But small businesses face the same choice.
Avindra Ramsingh owns Super Shavings in Howick and manufactures pine shavings for the horse, chicken and bee industries.
He said: “I approached the local police station to get a permit to sell to my customers and was given one.
“However, I can’t manufacture anything because I was told I would be fined R20 000. So how can I supply the shavings when I can’t manufacture it?”
He said he and his five staff members will not draw salaries at the end of this month.
Asked about accessing government funding, he said there is just too much red tape involved. He questioned how the industries he supplies will be able to produce food without getting what they require from him.
Beauty salon owner Genevieve Elliott said no work means no pay for her too. She said that since she does not have any staff members she can’t apply for any grant/funding from the government.
She added that she still has to pay her monthly bills and debit orders, which is “crushing her”.
“Coming out of lockdown I will be needing to replenish stock, which I have no idea how I’m going to do. I feel like I’m taking two steps back without even taking a step forward, just trying to keep my head above water.”
Michelle Bennett, who works as a virtual secretary for a doctor’s surgery, said her salary has been cut to one third of her normal pay, and she will not be able to pay for her bond and vehicle.
These stories are echoed by numerous others and there is not much that can be done to assist them.
Labour law attorney Kurshivan Munsamy said that if a person is not working during shutdown, the employer is under no obligation to pay his/her salary.
In this case, the employees must claim UIF and assistance from the reduced time benefit scheme.
However, those who are working should be paid their full salaries. There are also sectors (for instance clothing and textile) in which collective agreements have been concluded between the employers and trade unions to regulate payment of wages. “You cannot use the shutdown period to reduce salaries directly. If this is going to happen than there must be an agreement process between employers and employees.”
August Mbhele of the South African Federation of Trade Unions said that what is happening to workers is frustrating. “All our hands are tied because of the lockdown. There is no forum where we can meet and discuss what is happening because of the lockdown … we can’t assist employees but we can see the problems.”
However, he added that the union does support government’s lockdown decision.
Mbhele also said that government is giving R3 500 to compensate employees but the administration work must be done by the companies.
Congress of South African Trade Unions (Cosatu) KZN secretary, Edwin Mkhize, believes it is unfair to cut the salaries of workers or to even lay off staff. “Workers are already suffering and unemployment is increasing.
“Companies must not be opportunistic and use this time to cut salaries and retrench people. A lot of companies can still exist and pay workers.”
He said companies should look into all the relief being provided by government, such as the Unemployment Disaster Fund, and access the funds.
“They must check what they can do to assist workers.
“We are also worried about companies forcing their workers to take leave. This is not a time for leisure where you can do what you want,” added Mkhize.
Steel giant ArcelorMittal said that the remuneration of all its employees will be reduced by between 40% and 45% from this month, for at least three months.
Independent Media has also released a statement about salary cuts for all employee grades. The lowest grades will take the smallest percentage cut while the highest, the biggest.
Woolworths will continue to pay staff during the Covid-19 shutdown, while senior management may cut their salaries by almost a third over the next three months to provide additional support to employees.
Board members, group CEO Roy Bagattini and the group’s senior executive team will forgo up to 30% of their fees and salaries over the next three months, the group said in a trading update, reporting that temporary store closures is expected to reduce profits.
Property giant Pam Golding Properties will be instituting salary cuts and reduced working hours.
Pension fund contributions have also been suspended, and the company has applied for Unemployment Insurance Fund Disaster Relief.
Chris Blair, CEO of 21st Century — a specialist remuneration, organisation development and change consultancy — has suggested ways that companies can address executives’ pay.
He said fixed pay reduction strategies at executive level may be considered so that the company is seen to be empathetic. A reason for implementing a reduction in executive pay would be to drive down costs and to conserve cash.
It can be done by stopping the investment portion of the executive salaries for a period which would reduce the executive salary bill by 15% to 20%.