Talks between Telkom and unions have broken down and a meeting is set to take place at the Commission for Conciliation, Mediation and Arbitration (CCMA) this morning, in a bid to resolve the impasse.
Solidarity and the South African Communications Union (SACU) are up in arms, because Telkom withdrew an offer of job security, while the largest union, Communication Workers Union (CWU), is standing firm on its demands.
Telkom and its three unions have been meeting for months, spending a total of 15 working days in talks that have failed to reach a conclusion for a wage hike that should have come into effect this April.
After having a change of heart and bumping its offer up from 1.5% to 6%, and offering a three-year moratorium on forced retrenchments if the offer was accepted, the telecoms company has now taken the job security aspect off the table.
A three-year moratorium on forced retrenchments is a deal breaker for SACU, which is threatening to get a strike certificate if today's meeting does not successfully resolve the current stalemate.
Job security
Solidarity has also accused the company of negotiating in bad faith after offering, and then withdrawing, job security. Telkom says it is still committed to its engagement with organised labour in the "best interest of its employees and the sustainability of its business".
SACU president Michael Hare says if Telkom does not reinstate job security, it will ask for a strike certificate. The union is seeking a pay hike of 7% and suspects Telkom withdrew the clause because of demands higher than its 6% cut-off level.
Telkom's 6% offer, contained in an e-mail communication issued by Meshack Dlamini, group executive for employee relations, was for a three-year period. It included the caution that "anything above the offered 6% will trigger forceful retrenchments, as indicated during our discussions".
Solidarity spokesman Marius Croucamp says Solidarity had a mandate from its members to accept 6% as it was linked to job security. Solidarity had wanted just more than 8% initially.
Croucamp says Telkom needs to negotiate with integrity and 15 working days have been wasted in talks that are now back at square one. If the situation is not resolved at the CCMA, Solidarity will go back to its members for a mandate as to what to do next, he says.
At the moment, the union has not raised the potential of a strike with its members, says Croucamp. He adds that the union has a duty to be responsible and look at SA's health, as the economy has been hard hit due to recent strikes. "Strikes are not the flavour of the month."
CWU spokesman Dennis Morobe says the union is "not moving an inch" on its demand, which is 11.5%, down from its initial 12%. Inflation is officially 5.9%.
Morobe says, based on feedback from its members, it is not looking good that a solution will be found and, while the union is open to negotiations, these cannot be endless as its members are running out of patience. CWU's biggest issue is the lack of a way to resolve a decade-old salary disparity issue, he adds. "I think our members have long run out of patience."
Morobe says the job security aspect is not as important for CWU as disparities, as retrenchments are governed by law.
Cutting back
Telkom is currently trimming staff numbers through a voluntary early retirement and retrenchment process, in a bid to cut costs as staff costs are approaching a third of total costs compared to the benchmark 25%.
However, the telco may move to forced retrenchments if the voluntary process does not have the desired effect. In March, Thami Msubo, chief of human resources, said Telkom may look at retrenchments after the window-period closes, which happens at the end of August.
Unions have indicated they will not stand for forced retrenchments and job security at the company is vital for morale. A Telkom briefing, uploaded by Solidarity, says its 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. The operator is set to release its annual results next Friday, but has already warned headline earnings per share will be more than 20% lower than last year.
In addition, this morning it issued a statement saying its board is considering impairing the carrying value of its legacy network. It points out that when the carrying value of an entity's net assets is more than the market capitalisation, it is an indication that the carrying value of the assets may be impaired.
Telkom's market capitalisation is currently R7.6 billion, as its share price has been hammered for the past year due to several factors, including lacklustre results, the binning of the KT Corporation deal and top-level changes.
The entity says it is investing heavily in upgrading its fixed and mobile networks, and has planned capital expenditure of up to R21 billion. Recently-appointed CEO Sipho Maseko says an impairment will allow Telkom to "reset our base and be competitive".
"It will also send a clear message to our stakeholders that we are prepared to take bold action to ensure that Telkom is positioned to succeed. It is important for us to focus on sustainable earnings going forward and the market segments where Telkom has a competitive advantage."
A non-cash impairment will not affect cash flow, and is merely an accelerated depreciation.
Share