Administrator Simo Lushaba says rightsizing is a critical strategy. File picture: ROBERT BOTHA
Administrator Simo Lushaba says rightsizing is a critical strategy. File picture: ROBERT BOTHA

THE South African Post Office (Sapo) is to be radically right-sized with about 22% of its workforce due to be offered early retirement, retrenchment or new posts in other parts of the organisation.

However, the buy-in of the relevant trade unions has not yet been secured and will be critical for its success.

Simo Lushaba, the administrator appointed late last year to put the loss-making company back on its feet, said on Tuesday about 5,065 of the 23,820 posts, some of which are vacant, would have to go as part of the entity’s turnaround plan. This could save about R728m. About 1,807 employees qualify for early retirement.

Mr Lushaba told members of Parliament’s telecommunications and postal services portfolio committee that Sapo would engage with the trade unions on the right-sizing plans.

South African Postal and Allied Workers Union (Sapawu) general secretary David Mangena said the matter had been raised with the union, not necessarily as retrenchments but as a rationalisation of posts.

However, a "vague" communiqué had been sent to employees last week that mentioned job cuts.

Sapawu would not support the broader turnaround strategy if retrenchments went ahead, he said.

Communication Workers Union general secretary Aubrey Tshabalala said the union might table its own strategy to the committee as it believed that of the administrator was "narrow and overly focused on operational matters". The issue of the job cuts was a "cut and paste" from previous turnaround strategies.

But Mr Lushaba stressed that implementation of the plan was critical.

If successful, it would see losses reduced from the R1.37bn of 2014-15 to R102m in 2016 and for profits of R1.3bn and R1.5bn to be generated in the following two years.

Savings of R4.6bn over the three-year period are envisaged, including on staff, which is the biggest cost.

However, MPs were sceptical over whether these ambitious targets could be reached in such a short time, although they were encouraged by the administrator’s briefing. The administrators are due to pull out at the end of the month.

Mr Lushaba said Sapo was struggling to meet its cash outflow requirements and that there was also a backlog of debt. The treasury and the Department of Telecommunications and Postal Services had been asked for permission for the Post Office to increase its borrowings by R1.25bn. This would be backed by the state guarantee of R1.67bn issued in December last year.

"Binding term sheets of R1bn have already been obtained from interested banking institutions," he said.

Also critical to the turnaround, he added, would be to stem the loss of about R1.3bn to R1.5bn a year due to breaches of the regulation which reserves a segment of the postal market for its exclusive operation.

Recovering this amount would allow Sapo to break even, Mr Lushaba said.

In terms of a regulation of the Independent Communications Authority of SA, post and parcels of less than 1kg are reserved for Sapo for it to generate sufficient revenue to enable it to provide services in underserviced areas.

Mr Lushaba said that this regulation was not respected by government or private-sector entities and had contributed to Sapo’s losses.

 

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