South Africa faces retrenchment crisis – Solidarity

26th April 2016

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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With South Africa facing a direct “jobs bloodbath”, the peripheral consequences in the wake of the retrenchment of some 60 000 workers would be five times the impact expected, a new report by trade union Solidarity revealed on Tuesday.

The current pattern and wave of retrenchments was a greater crisis than the recessionary downsizing of 2008/9, when only 22 000 workers faced retrenchment.

Unpacking the Solidarity Retrenchment Report 2016, CEO Dirk Hermann said the potential retrenchments across the board looked dire; however, the mining, information and communication technology (ICT) and metal and engineering sectors would be hardest hit.

Over the past year, some 88 companies issued Section 189 processes impacting 58 549 workers, as South Africa faced an almost perfect storm that was “destroying” jobs.

In the year to April, 36 companies in the mining sector engaged in widespread retrenchment processes, with 29 261 employees facing retrenchment, while 8 141 employees from six ICT companies were affected by retrenchment.

Another 24 companies in the metal and engineering industry initiated retrenchment processes that would impact 7 918 employees, while six companies and 835 employees in the chemical industry have been affected by retrenchments.

In the professional industry, some 5 370 jobs hung in the balance as retrenchment processes instituted over the past year played out, while the number of contract workers affected remained unclear with no definite way to quantify the jobs cuts.

However, this was not the whole picture, Hermann said, noting that the impact would be wider than the direct retrenchments, particularly as the bulk of jobs under a company downsizing implementation were shed prior to the Section 187s.

Solidarity general secretary Gideon du Plessis said the number of workers eventually retrenched paled in comparison to the number of job opportunities lost in the wake of a formal retrenchment process.

“A formal retrenchment process is normally preceded by a so-called process of natural attrition by which vacant posts are not filled; attractive voluntary severance packages (VSPs) are offered; and employees who are close to retirement are requested to go on early retirement, the end result being a huge drop in staff numbers before the forced retrenchment process commences,” he explained.

Retrenchments were, in effect, only a portion of a downsizing initiative, he said, citing the 5 108 workforce reduction at mining group Lonmin through natural attrition. Only 78 workers were forcefully retrenched.

Telecommunications group Telkom managed to cut back its workforce by 4 500 employees through offering VSPs over the past 12 months prior to the implementation of a formal retrenchment process.

“The number of employees accepting VSPs is increasing at an alarming rate, as many employees have simply reached a saturation point with having to work amid such uncertainty,” Du Plessis said.

“The end result is usually the misallocation of severance package and pension funds, with the result that, generally, their funds run out even before they can find another job.”

Further, those that do manage to secure employment in an industry plagued by retrenchments, are usually faced with lower pay or only a short-term job opportunity.

On the other side of the spectrum, external job opportunities were also lost post the formal retrenchment processes, he said, citing the retrenchment of 2 000 workers at Highveld Steel leading to a further 13 000 job losses within the sectors providing services and products to workers and the company.

Solidarity noted that 1.7 job opportunities were lost as soon as one person in the mining sector was retrenched. The situation was exacerbated by the fact that entry-level miners have an average of ten dependants, which meant that any loss of work would have a ripple effect.

“The situation in the manufacturing sector is much worse as four external jobs, including jobs at service providers, contractors and support services, are lost for every permanent job abolished,” he added.

Solidarity based its insights on press reports and retrenchment notices issued between April 2015 and April 2016 where the trade union represents members.

Most of the processes were still ongoing, while some had been concluded.

Edited by Creamer Media Reporter

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