People queue at the Parkview Post Office in Johannesburg. Picture: THE TIMES
People queue at the Parkview Post Office in Johannesburg. Picture: THE TIMES

The SA Post Office (Sapo) has dismissed suggestions that it may retrench staff to manage labour costs.

This week, Sapo executives bemoaned the high and unsustainable cost base at the cash-strapped parastatal, especially salaries and perks, which eat more than 70% of its revenue.

Sapo executives told MPs on Tuesday that a process is under way aimed at reducing staff numbers and increasing productivity. But in statement on Thursday, Sapo clarified that its processes to reduce labour costs do not amount to retrenchments. It said it is, instead implementing several alternative labour cost containment and reduction measures.

“Sapo has, in consultation with employees and the unions, embarked on a programme in which it has offered voluntary severance packages to qualifying employees and 776 applications have been approved. The total severance packages cost is R130m and the annual savings on labour costs through this programme is R204m,” the company said.

Sapo is also investigating other measures of attaining as much “flexibility and variability as possible in relation to its labour costs structure, for example, in the utilisation of overtime and the sum of this cost item, which currently amounts to R42m per annum.”

Sapo employs about 23,000 people and operates more than 2,400 postal branches around the country. In its recently tabled annual report for the 2018/2019 financial year, it recorded a R1.1bn loss, which was R95m more than the prior year. It received a qualified audit opinion and doubts have been raised about its going-concern status. 

Sapo has not been profitable in the past 13 years, except in 2006, when a profit of R276m was recorded, which excluded the subsidy received from the government. From 2001 to 2012, the subsidy amounted to R300m a year. It was temporarily halted in 2012/2013, which, along with a four-month-long wage strike in 2014, contributed to losses of more than R800m.

The government recently granted Sapo R1.5bn over the medium term, and a further R2.9bn to fund future capital expenditure. Cumulative allocations from the government amount to R8.6bn from 1991. Executives told parliament this week that the funding received has been used to settle historical legacy creditor backlogs; staff conversion from part-time to permanent, as part of collective agreements and amendment in legislation; and staff salary increases.

Retrenchments are said to be unavoidable at other struggling state-owned entities (SOEs) that are heavily reliant on the state to stay afloat, including Eskom and the SABC. But this route has previously been blocked by the government amid pressure by trade unions as the government struggles to convince ratings agencies that it can address the mess at SOEs, as well as the runaway public-sector wage bill.

phakathib@businesslive.co.za