Trade union Solidarity is meeting with its lawyers this afternoon about Telkom's plan to offer voluntary retrenchment packages to its non-unionised staff.
This after Telkom CEO Sipho Maseko yesterday announced the telco would abandon a process of forced retrenchments for over 4 000 staff and instead offer employees voluntary packages.
Marius Croucamp, head of the telecommunications industry at Solidarity, says if Telkom is truly taking forced retrenchments off the table, then this is a victory for unions. However, he says Solidarity was alarmed to find out Telkom announced its plans to staff and the media before attempting any contact or consultation with organised labour.
Telkom went public yesterday, saying it is offering its around 40% non-unionised staff base the opportunity to apply for either voluntary severance packages or voluntary early retirement packages. Maseko said the packages on offer will be significantly more generous than those required by law and employees will have until 27 July to apply.
"Telkom will engage with organised labour and will be seeking the consent of the unions to extend the offer to union members as well," according to Maseko.
Croucamp says the union needs to seek legal advice to determine if Telkom's offer is in breach of a Labour Court order issued last week that halted the telco's planned retrenchment of around 4 400 workers.
Solidarity says yesterday's announcement left it with many questions which it hopes to have answered by Telkom when they meet later this week.
"We want a guarantee that they will not force retrenchment again in future," says Croucamp.
He says that from the union's perspective, a court-ordered consultation process must continue despite the fact that Telkom has withdrawn Section 189 notices for retrenchment of staff.
"Our interpretation of the court ruling is that CCMA consultations between Telkom and unions cannot be abandoned."
Turning Telkom around
Maseko insists Telkom has no option but to continue with its business transformation strategy, including cutting costs by at least R1 billion a year going forward, if it is to ensure its sustainability over the long-term.
Ovum analyst Richard Hurst points out that voluntary retrenchments alone will clearly not provide the cost-cutting needed for the company's turnaround strategy, but are a middle ground approach to the company's proposed workforce streamlining.
"This offers a shift of responsibility and burden away from Telkom, and is probably a step in easing tension with the unions. However, it is not the sole element of the strategy, and Telkom will probably look at other issues, such as increasing efficiency with existing resources."
Telkom is considering other cost containment options, including a wage freeze that would include the CEO and all management. It is also looking at implementing reduced or flexible working hours, new methodologies to improve productivity, and potential outsourcing options.
Maseko says the company faces significant challenges and despite implementing a number of actions to turn the business around, it still has a long way to travel if it hopes to survive and become sustainable. He says challenges impacting the business include the decline in fixed-line voice and line rental, a revenue to staff cost ratio that remains significantly higher than industry norms, and the growing threat of competition.
BMI-TechKnowledge director Brian Neilson says only time will tell whether voluntary retrenchments will be sufficient to help the telco's turnaround, or whether more forced retrenchments may be necessary in future to achieve desired cost savings.
"In general, I think Telkom is doing what is necessary from a cost-cutting perspective, exploring all avenues and following due process."
He says, however, that cost-cutting is only part of the equation and it is equally critical for Telkom to improve its ability to stave off competition.
"The risk, of course, is going beyond 'cutting out fat' by inadvertently 'cutting into muscle', and becoming less competitive in the process."
Scare tactics
According to Maseko, competition is a key stumbling block and as financial constraints become more severe "our flexibility to offer generous severance packages decreases. It is therefore highly unlikely that packages of this nature will be offered again."
Croucamp says threatening wage freezes and implying packages will decline in value going forward are merely "scare tactics to pressure employees into making a decision quickly". He says proper consultation is needed so that employees have all the facts and can make an informed decision.
"Telkom needs to share its business strategy with us so that we can determine how it will really affect workers."
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