Union slams Telkom for paying execs R100m then retrenching workers

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 16 Jan 2020
In the previous financial year, Telkom CEO Sipho Maseko alone took home R23 million, says Solidarity.
In the previous financial year, Telkom CEO Sipho Maseko alone took home R23 million, says Solidarity.

Trade union Solidarity has slammed Telkom’s move to retrench thousands of employees while paying over R100 million in remuneration to top executives.

The labour body issued a statement this afternoon after Telkom said it will cut up to 3 000 jobs as it is faced with dwindling fixed-line revenues.

Telkom has endured challenges with declining revenues in fixed voice and fixed data services over several years.

The affected jobs include support employees, specialist and operational employees, and supervisory and management levels in its wholesale division Openserve, the consumer unit, as well as in its corporate centre.

However, Solidarity is not happy with the telecommunications giant’s latest round of job cuts, which is something the telco has been doing for a number of years, looking to reduce its wage bill.

Retrenchments become necessary when the sustainability of a company is at issue, but this retrenchment round in fact threatens the company’s financial sustainability, says the labour union.

“A company cannot pay its executive team more than R100 million and then get rid of 3 000 of its workforce. That is reckless and, given the labour market retrenched workers have to face, it is merciless. In the previous financial year, Telkom’s CEO, Sipho Maseko, alone took home a full R23 million,” says Dr Dirk Hermann, Solidarity CEO.

Solidarity says it is requesting an aggressive retraining programme be implemented during the moratorium so workers can be equipped with new skills to help Telkom grow in the fast-changing information environment.

It notes Telkom workers must move forward with the company from fixed-line services to mobile services.

Hermann contends the fact that Telkom now wants to retrench up to 3 000 people serves as confirmation that it has failed dismally to retrain its people so that it can grow even faster in its growth areas such as mobile services.

“When a company fails to train its workforce for new challenges, it should not retrench the workers; it should get rid of the top management,” says Hermann.

According to Solidarity, Telkom’s workforce already shrunk by 2 176, or 12.5%, in the previous financial year.

It explains this was not due to forced retrenchments but mainly because of voluntary severance packages.

Hermann says large-scale staff reductions at a company can easily lead to poor service delivery. “A further 3 000 jobs being cut are too many. If staff numbers need to be reduced further, it can be done by means of voluntary processes and natural staff turnover.”

The union points out the IT environment is highly competitive and skilled workers are scarce. The uncertainty Telkom is creating will merely result in the best workers leaving first, it says, adding this can lead to the company going into a downward spiral.

“The message sent out by Telkom should rather be that loyal employees are appreciated. A moratorium on forced retrenchments will provide the security that Telkom employees now need,” Hermann concludes.