Salary crisis at South African state-owned company

Trade union Solidarity has flagged a growing salary and governance crisis at Denel, South Africa’s state-owned aerospace and defence company.

The group said this comes after reports that employees at Denel Pretoria Metal Pressings (PMP) were informed during a general staff meeting that the division is unable to pay salaries for this month.

“It has since also been reported that employees at Denel Dynamics have been informed similarly that their salaries will not be paid,” Solidarity claimed. 

“This indicates a growing group-wide crisis rather than an isolated problem within a single division.”

Solidarity network coordinator Derek Mans said the situation is “completely unacceptable and deeply alarming”, particularly in light of the far-reaching intervention measures introduced less than a year ago to stabilise Denel’s operations.

“In 2024, Denel PMP, in cooperation with Solidarity and the Denel board, established a multidisciplinary task team – with active labour participation through two trade unions – to advise Denel’s executive management and board on a sustainable turnaround strategy for PMP,” Mans said.

He explained that the task team operated under approved terms of reference covering, among others, governance, safety, operations, funding, and sustainability. 

The turnaround process was managed as a project to accelerate implementation.

According to Mans, the team consisted of industry experts, former PMP executives, and experienced former Members of Parliament, including former DA MP Kobus Marais. 

He explained that the strategy document was finalised in December 2024 and submitted to Denel’s board, along with comprehensive recommendations and cost estimates.

“At a formal board meeting on 18 February 2025, the Denel board approved the implementation of the turnaround plan, estimated to cost approximately R120 million,” he said.

However, according to Mans, less than a year after this approval, the following took place –

• Denel PMP has reportedly experienced four explosions, raising serious concerns about operational control, safety management, and maintenance.
• Employees at both Denel PMP and Denel Dynamics have been informed that salaries cannot be paid.

“There is no visible accountability for the failure to implement an approved and funded turnaround strategy,” Mans said. 

“This inevitably raises the question – where are the consequences for this continued failure in execution and oversight?”

Deeper than salaries 

Mans explained that the growing salary crisis, now affecting more than one division, underscores a systemic governance and leadership failure at Denel. 

“This is further aggravated by the continued absence of a permanent Denel board, despite expectations that the appointment process would have been completed by December 2025,” he said.

“Solidarity has long warned that Denel cannot be stabilised through interim leadership structures, fragmented accountability and crisis-driven decision-making.”

He said the following is now urgently required –

• The appointment of a new, permanent board with appropriate expertise in the defence industry, engineering, finance, and project execution.
• Consequence management for the non-implementation of board-approved strategies.
• A pragmatic management approach with zero tolerance for corruption.
• Serious consideration of public–private partnerships to restore sustainability, protect strategic capabilities, and secure jobs.

“Employees cannot continue to pay the price for governance paralysis and leadership vacuums,” Mans said. 

“Denel’s strategic role, and the livelihoods of its employees, require decisive leadership, accountability and immediate intervention.”

“Solidarity will continue to pursue all available avenues to protect its members and to hold those responsible accountable.”

Denel has faced financial difficulties for years, many of which are linked to South Africa’s era of state capture.

During Jacob Zuma’s presidency from 2009 to 2018, Denel became a target of state capture, with politically connected executives and board members appointed to facilitate looting.

This saw Denel swing from profitable – a R395 million profit was reported in 2015 – to being crippled by debt and liquidity issues.

Between 2017 and 2023, Denel struggled to pay salaries and suppliers, leading to a collapse in operations. While government bailouts provided temporary relief, mismanagement continued, and Denel failed to secure new contracts.

However, not much is known about Denel’s financial troubles in recent years, as the company has not tabled an annual report since the 2019/20 financial year.

Daily Investor reached out to Denel for comment. Once received, the company’s response will be added to this article.