South Africa

Post Office turnaround to cost thousands of jobs

Post Office

The South African Post Office’s (SAPO) business rescue plan will result in around 7,000 jobs being lost to make the entity a sustainable business. 

This was revealed last week when the business rescue plan by joint business rescue practitioners Anoosh Rooplal and Juanito Damons was approved by the majority of creditors.  

“The Post Office fulfils an important social mandate intended to provide key basic communications services to all households, including in rural areas, where access to Wi-Fi, smartphones and printers are not a given,” he said. 

They said returning it to a solvent position will require a revenue increase and creating an effective and efficient cost structure.

Rooplal said they have been working with the Post Office’s management to address the decline in revenue.

They also want to reduce costs, affect critical structural changes in the business model, and consider key investments in technology and infrastructure to drive performance.

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

As its finances deteriorated, it prioritised paying the employees the cash component of their salaries from 2020.

The entity was simply not making enough money to cover other employment costs, including 

medical aid and pension funds.

Earlier this year, it was reported that the business rescue plan entailed cutting the Post Office’s workforce in half to cut its wage bill by R1.3 billion. 

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

The plan’s three phases over five years include the reduction of the branch network to about 600 and the reduction of staff to about 5,000 employees.

The plan also seeks to repurpose the Post Office through hybrid mail extensions, new motor licence disc solutions, increased property rental revenues or sales of owned property, and a digital hub for inclusive communications.

“Strategic partnerships will be included in the strategy to bolster capabilities and resources in logistics, operations and information technology. An example is the large depot network that is strategically located throughout South Africa,” the practitioners said in a statement. 

According to the business rescue plan, these interventions would save a large number of jobs compared with liquidation. 

The Post Office’s inability to continue trading and the risk of receiving no dividend through the liquidation process would endanger even more jobs.

“A liquidation or insolvency outcome for the company would be catastrophic for all stakeholders of the company as well as for South Africa. It would result in the loss of all jobs and a strong likelihood of all concurrent creditors receiving 4.08c on the rand in respect of their claims,” they said. 


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