The Solidarity trade union has reported that, at a meeting with Denel management on May 18, the State-owned defence industrial group had confirmed that it could not pay its staff their salaries at the end of this month. Export orders worth R101-million could not be delivered because the necessary permits had not been issued.
“The current [anti-Covid-19] lockdown measures are aggravating the situation in which Denel finds itself,” highlighted Solidarity defence and aviation sector coordinator Helgard Cronje. “As a result, no income is generated, and taking into account historic liquidity problems experienced by the company, cash flow has dried up to such an extent that salaries cannot be paid next week.”
The export permits had to be approved by the National Conventional Arms Control Committee (which includes several Cabinet Ministers) and were then issued by the Directorate: Conventional Arms Control. The lockdown had seen both these bodies closed. Solidarity believed that the Directorate would re-open on May 20. It had been unable to ascertain when the Committee would meet again.
“The State, which is also Denel’s shareholder, must do everything in its power to expedite those bureaucratic processes to ensure people’s income,” he urged. “The current lockdown regulations exacerbate the financial plight of families, loss of workers’ income, and contribute to a full-blown social crisis in South Africa. Companies must be allowed to do business and workers must be allowed to work without having to compromise their health.”
Solidarity called for the lifting of the current lockdown regulations. That would allow businesses like Denel to earn income. That, in turn, would mean that Denel would cease to be dependent on the State and no longer need bailouts or other government aid.
The union affirmed that it was not necessary to chose between employees’ health and their going to work. It was possible for employees to work safety and so companies could restart their operations. Currently, workers were losing their income and their employers were suffering huge losses. The effect on the economy was “catastrophic”.