7,000 Post Office jobs at risk

The South African Post Office (SAPO) has been placed into business rescue by the Gauteng High Court, with a plan to save more than R1.3 billion in annual salaries by cutting its workforce in half. 

Business rescue proceedings will halt payments while turn-around specialists restructure the business to try and save it from liquidation. The court ruled that the business rescue proceedings would commence immediately.

The Post Office has run at a loss every year since 2013 and has failed to compete with private couriers. 

The judgment also acknowledged that the Post Office, which owes creditors more than R9 billion, has financial difficulties due to structural issues.

Judge Elmarie van der Schyff said, “The harsh reality is that the facts point to the SA Post Office’s workforce needing to be extensively curtailed for the Post Office to survive.”

According to estimates, SAPO employs over 12,000 people. However, unions say it is unknown how many people the Post Office employs. 

The plan of the business rescue practitioners involves putting roughly 7,000 jobs at risk to save more than R1.3 billion in annual salaries, according to a report by BusinessDay.  

Postbank will likely receive about R400 million with business rescue, leading to concerns that it will not have the reserves required to qualify as a fully-fledged, state-owned bank.

Placing SAPO into business rescue ensures that it will receive the R2.4 billion already allocated to it in February’s budget. 

In its business rescue application, SAPO said it needs R3.8 billion of funding in addition to R2.4 billion to execute its turnaround strategy. 

This is despite the state-owned enterprise having already been given over R10 billion in bailouts since 2014. 

Minister of Communications and Digital Technologies Mondli Gungubele argued that SAPO could not be liquidated as it is a strategic asset for the delivery of local and international post and distributing social grants.

The judge agreed with the minister, with Van Der Schyff saying the Post Office has an international role to play, noting that liquidating it could affect the whole economy.

“To hold a view that the taxpayers’ losses must be cut and that SA Post Office must be finally liquidated is simplistic and does not account for the intricate relationships and responsibilities that exist,” the judgment read. 

“SA Post Office, a vital government service platform, among others, renders an essential service, particularly in rural and remote areas.” 

“In the international context, the interruption of the Post Office’s obligations might have dire consequences for all South Africans who use the postal services of other countries.”

Anooshkumar Rooplal and Juanito Martin Damons have been appointed interim business rescue practitioners subject to approval by the Registrar of Financial Services and ratification by most of SAPO’s creditors. 

This decision will give SAPO the much-needed time and space to restructure its affairs under the supervision and implement the turnaround plan to change its business model fundamentally, the government said.