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Telkom strike looms

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 17 Apr 2013
Some 18 000 Telkom workers will down tools if a dispute over salary discrepancies is not resolved in June.
Some 18 000 Telkom workers will down tools if a dispute over salary discrepancies is not resolved in June.

It is inevitable that 18 000 of Telkom's 21 000-strong workforce will down tools over a disputed four-year-old agreement to address salary discrepancies, say the two largest unions at the telco.

The Communication Workers Union (CWU) and the South African Communications Union (SACU) say Telkom has not made an offer in the current wage negotiations, and they are concerned a budget for salary hikes will instead be used to honour a 2009 deal to resolve salary discrepancies.

The pending strike would come at a time when Telkom is trimming its cost base and attempting to move forward. It would harm its ability to fix faults, handle maintenance and install new lines.

Telkom says the unions have not brought up the issue of a strike and the parties are not even close to such a point. "It would be premature and irresponsible to react to such statements."

Two years ago, a threatened strike was narrowly averted, when a last-minute offer from Telkom brought five months of salary negotiations to an end. Telkom's current two-year agreement with unions expired at the end of March.

Budget problems

SACU president Michael Hare says all three unions, including Solidarity, are currently involved in salary negotiations. Despite two meetings, Telkom has not put an offer on the table, claiming it has no budget, he notes.

Earlier this month, Telkom warned its headline earnings per share will be at least 20% lower when it reports full-year results. Hare says the three unions have asked for a 10% increase, but would be likely to settle at between 6.5% and 7%.

Solidarity says on its Web site that Telkom has not tabled its proposals, which is viewed as negative by the unions. Solidarity says Telkom has urged unions to take its adverse financial situation into account. The next substantive negotiations will take place on 24 and 25 April.

Telkom says it has not yet responded to the demands nor tabled a wage offer, but this will be done during the next negotiation session.

Dispute

Unions have also declared a dispute with Telkom, because it has not honoured its differentiated reward model, inked in 2009, Hare says.

In September 2009, a collective agreement between Telkom, SACU and Solidarity agreed on a framework to reduce salary disparities. The agreement, which was in force until March 2011, specified how workers would be moved up pay grades in a bid to level out salary disparities.

Telkom says the model has not yet been implemented, as it is still in consultation around it with unions. An agreement in principle has been reached that will come in this month, provided there is a mutual agreement on the implementation process.

Hare says all 18 000 unionised workers will strike if Telkom intends using a budget for salary increases to apply the 2009 agreement. He says the agreement should have been fully implemented two years ago.

In June, the parties will have their final meeting around the dispute, and will then decide whether to down tools, says Hare. He adds that a strike is inevitable.

CWU spokesman Dennis Morobe says the wage talks are currently at a stalemate. He says the only way to force Telkom to comply with its agreement is to go on strike.

Morobe adds that Telkom has said there is no money for salary increases, or the differentiated reward model. He says the company needs to cut its costs and get rid of "a chunk" of staff, but unions are concerned there may be forced retrenchments later this year.

Telkom says salaries and the wage model to resolve wage discrepancies form part of the substantive negotiation process and will be addressed during this process.

Cutting costs

In March, Telkom said it was looking to cut down on staff numbers, and was offering voluntary severance and early retirement packages from 15 March to 31 August, before embarking on a retrenchment process, if necessary.

Thami Msubo, Telkom's chief of human resources, said at the time there is an "urgent need" for Telkom to address its human capital requirements, which impacts substantially and directly on the company's cost base.

A Telkom briefing, which has been uploaded onto Solidarity's Web site, says staff costs are approaching a third of total costs. It notes that the comparative figure for other fixed-line operators is below 25%.

Telkom's presentation states revenue is under pressure and structural changes to the cost base are inevitable. It says a significant saving, in the form of a headcount reduction, must happen while at the same time minimising the impact on revenue generation and protection.

Telkom warns that, after the window period, voluntary packages will be "reduced significantly" and in future, all forceful retrenchments will be paid out based on the minimum benefits in the Labour Relations Act.

Hare says the first round of voluntary separations has been completed, but only those who are 50 years old or older have had their applications accepted. He says this is a "slap in the face".

Hare has heard that about 950 applications were submitted, and around 500 accepted, although this information has not officially been given to the unions. Telkom has not specified the criteria for accepting some applications and not others, and has also not elaborated as to how many people, or what percentage of the cost base, will be trimmed, he says.

Telkom argues that both early retirement and voluntary retrenchments have been accepted.

Bad timing

Ovum analyst Richard Hurst says the strike would have a huge impact on the company and comes at a time when Telkom is "trying to get their story right". He says a strike would be disruptive and make Telkom look less attractive to investors, such as a potential strategic equity partner.

Hurst adds that Telkom would have to fend off a strike almost at any cost, especially as it would hinder its ability to install new lines and resolve faults, which would be concerning.

Telkom is under pressure to do something with its costs and is busy with a balancing act, and a strike would upset the balance, says Hurst.

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