Business Maverick

BROKE & BROKEN

SA Post Office plans another round of retrenchments to break its money-losing streak

SA Post Office plans another round of retrenchments to break its money-losing streak
A general view of the South African Post Office (SAPO) in Parklands on 15 May 2020 in Cape Town, South Africa. (Photo: Gallo Images / Misha Jordaan)

The embattled SA Post Office is set to launch another round of retrenchments because the state-owned enterprise is broke and desperately needs to cut expenses. It doesn’t help that the Post Office has been losing money for 15 consecutive years and that the government continues to ignore its pleas for a bailout.

The Post Office plans to lay off more employees as the state-owned postal company has been on a money-losing streak for 15 years and forced to operate without financial support from the government.

Retrenchments at the Post Office were always on the cards, but what remains unknown is just how many jobs the company plans to cut. 

The Post Office launched a two-phase approach to retrenchments aimed at reducing costs like the company’s salary bill, which accounts for 61% of its total expenditure. 

Phase one of the retrenchment process saw 668 job cuts in 2021, reducing the workforce from 15,826 to 14,460. (Beyond planned retrenchments, the Post Office’s workforce was also reduced through resignations, dismissals and the expiration of fixed-term contracts). 

The Post Office joined the ranks of other state-owned enterprises that cut jobs, including SAA, SA Express, Airports Company South Africa, Denel, SABC and Transnet. 

The Post Office is now pressing ahead with the second phase of retrenchments in which the company is aiming to slash at least 600 more jobs. 

But this number has been disputed by trade unions representing Post Office employees, saying the company plans to lay off as many as 6,000 employees – or 41% of its current workforce. 

The Communication Workers’ Union and trade union federation Cosatu believe that the Post Office plans to retrench thousands of employees, a view that could have been informed by the company’s three- to five-year turnaround plan. 

Various versions of the plan envisage the Post Office only needing up to 10,000 employees to run an efficient and modern company that offers more than traditional postal services, including online car licence renewal bookings and others. 

Postal companies around the world are struggling to reinvent their operations for a world in which consumers rely far more on electronic methods of communication than they do on mail. People are also opting for faster, more efficient parcel delivery services run by private sector companies. 

In South Africa, the Post Office is painfully aware of this major shift in consumer patterns, exacerbated by the company not being able to fulfil its basic function of delivering mail on time and to the right address. 

For instance, the Post Office’s mail delivery performance reached 75% in 2017. It has fallen to 68% in 2022. The Post Office has missed a self-imposed target of an 80% mail delivery performance for many years. 

National Treasury sees the Post Office operating with a staff count of 10,254 by 2024/25 as the declining nature of its operations requires fewer employees. 

Trade unions have interpreted Treasury’s projected reduction in the workforce as preparations for mass retrenchments.

However, a Post Office spokesperson said a formal retrenchment process has not yet started, and that the company is still consulting with trade unions, employees and the government (the Post Office’s sole shareholder). 

“The number of affected employees has not been determined yet. At the moment, it’s only the consultation process [that is under way]. The SA Post Office will not implement any steps affecting its workforce without following a proper consultation process with all parties,” the spokesperson told Business Maverick


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Financial crisis

Whether the Post Office plans to cut 600 or 6,000 jobs, it will be a process fraught with complexities. 

Any retrenchments have to be funded because affected staff have to receive severance packages. But the Post Office cannot fund these packages because it is broke – and broken. 

The Post Office reported a financial loss of R2.2-billion during the year to the end of March 2022. The company has been reporting financial losses for 15 consecutive years. Operationally, only 303 Post Office branches out of 1,266 in its network are regarded as profitable — meaning that its branches are not suitable or sustainable for generating profits. 

The Post Office is so broke that it owes some of its employees their salaries. The company has also been deducting medical aid, pension and Unemployment Insurance Fund benefits from pay cheques, as well as personal income tax intended for the South African Revenue Service. 

But the Post Office has, for more than a year, failed to hand over the deducted funds to relevant institutions on behalf of its employees.

Deducting from employees’ salaries and not handing the funds over to relevant authorities is illegal, and this has potential consequences. In the private sector, business owners have been prosecuted for such behaviour, yet the Post Office remains untouched. 

By the end of March 2022, the outstanding amounts have reached R4.4-billion. This is made up of R928-million owed to the South African Revenue Service, R769-million owed for the retirement benefits of employees, R645-million owed for medical aid contributions, R150-million owed in outstanding salaries and R100-million owed in UIF benefits. 

It seems the Post Office has no option but to ask the government for a taxpayer-funded bailout if it hopes to stand any chance of survival. 

However, the company’s request for money was ignored by Finance Minister Enoch Godongwana in his recent Medium-Term Budget Policy Statement. DM/BM

Gallery

Comments - Please in order to comment.

  • Jane Crankshaw says:

    Another opportunity squandered by the ruling party thanks to racist BEE employment policies. It had a chance to survive when Mark Barnes and Net1 ( for efficient grant payments) stepped in but that success was to be short lived when it was found the intervention interfered with the opportunity to rob the taxpayer…yet again!

  • Garry Hodgson says:

    And Mark Barnes made a serious offer to buy the organisation a few months ago and didn’t even get the courtesy of a response from Government. Someone has their eye on the Post Bank. Rich pickings there for some.

  • Larry VANGELDER says:

    It is interesting that SAPO can retrench workers but Eskom cannot.

  • Palesa Tyobeka says:

    The post office should start by looking internally at its processes first instead of complaining about a bailout. A more incompetent organization I have yet to see. Documents sent to me via registered mail traversed the lengths and breadth of SA for around 3 months before reaching their destination. Pure incompetence and lack of management systems.

  • Patrick O'Shea says:

    Does anybody care? With the amount of thievery that went on there, coupled with non-existent service and attitude bordering on hostile, it should have gone under a long time ago.

  • Ian Gray says:

    The unions destroyed this business in 2014 when they took their members out on a 4-month strike. Customers took their business elsewhere and see no incentive to return. Does anyone still use the post for Xmas cards – and do they get them before Xmas?!!

    • Pet Bug says:

      Yup, that strike broke the wheel.
      SAPO had one shot with Barnes, and government f it up.
      They should just paid up the Debitors.
      And close the shop, if there is one left.
      It’s simply no longer relevant.

  • nickha says:

    The Post Office over may years (a decade or two) neglected the client base and people lost confidence, suddenly new ways of communicating, no more letters are posted end e-mail and Whats-up took over, no more parcels and Post Net took the business. I collected post from a post box kiosk for many years. The inside of the kiosk was filled to the roof with letters that never reached the post box. Nobody buys stamps anymore. I had savings account with the Post Office which was closed in favour of my bank and the convenience thereof.
    The Post Office cannot be saved. It lost all trust through incompetence, borruption and bad service.

  • Chris Taylor says:

    The bigger question is how many Post Office branches will be closed, and how many will stay open? In the urban areas replacement services can be found; email for all written correspondence, low-cost courier for parcels and registered letters. What happens in the rural and poorer areas? I suspect technology and private industry will find a way, and when it does the SA Post Office can finally be buried.
    PostBank will doubtless follow the same course. There is no commercial understanding in the Post Office, as was shown by the embarrassing response to the DA’s urgent request for a feasibility study. The banking market is over-supplied with excellent banks and newer more nimble outfits. What strengths can PostBank possibly bring to market?

  • Rg Bolleurs says:

    Salary cheques should be sent to employees in the post. This will at least fix the mail delivery problems

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