Jobs bloodbath at one of South Africa’s biggest state-owned companies 

The South African Post Office has cut 4,875 jobs as part of its business rescue process, nearly half of the state-owned company’s staff. 

The Post Office has been experiencing significant financial difficulty for a decade. It last posted a profit in 2013. Since then, it has posted over R19 billion in losses and racked up a mountain of debt. 

Two years ago, the South African Post Office (SAPO) entered into business rescue as a condition for additional government funding. 

One of the key ways in which its Business Rescue Practitioners (BRPs), Anoosh Rooplal and Juanito Damons, planned to save the company was by cutting costs. 

As the employee payroll made up the largest portion of the company’s costs, the BRPs outlined plans to slash the Post Office’s workforce. 

The initial business rescue plan included significant cost-cutting measures, particularly reducing the size of the Post Office’s branch network and employees. 

Rooplal and Damons planned to reduce the company’s branch count to 600 and employee headcount to 5,000. 

This was estimated to save the company around R1.3 billion in annual expenditure, with the reduced headcount making up nearly R1 billion.

Former Communications Minister Mondli Gungubele estimated last year that employee costs alone at 150% of the Post Office’s revenue. This means the company spends more on its employees than it makes every year. 

The plan to cut jobs was met with fierce opposition from unions, who pressured the BRPs into coming up with a new plan that was not based on cutting staff. 

In April this year, an agreement was reached between the BRPs and the Congress of South African Trade Unions (COSATU) to withdraw retrenchment notices issued to SAPO workers. 

According to the pact, the government’s Unemployment Insurance Fund’s Temporary Employment Relief Scheme will help to pay employees for the next 12 months.

During this period, a “progressive turnaround plan, not based upon culling staff” will be put in place. However, the BRPs appear to have continued with the section 189A process to retrench employees. 

“Following a section 189A retrenchment process facilitated by the CCMA, 4,875 employees were dismissed and will be paid their retrenchment packages over three tranches,” the BRPs said in a presentation to Parliament on Tuesday. 

The last tranche will be paid out in November. 

The Post Office is not the only state-owned company to experience significant job cuts once the government did not have full control over operations.

Another state-owned company, Telkom, has cut 51,360 jobs over the last 25 years. Telkom began the gradual process of cutting its workforce in 1999 when it had 61,237 employees. 

Ten years later, despite strong resistance from trade unions, the company cut its employee headcount to 23,520. 

Despite significant staff reductions since the early 2000s, Telkom remained inefficient and out of step with its industry peers.

When evaluated by metrics such as revenue per employee and subscriber per employee, Telkom still lagged behind competitors like Vodacom and MTN.

Another factor behind the staff cuts was the shift in technology. In October 2010, Telkom launched its own mobile operator and made substantial investments in wireless technologies.

Fixed-line services like ADSL and POTS required technicians to install lines and visit homes or offices for repairs, necessitating a large workforce to ensure customer satisfaction.

However, Telkom’s fixed access lines declined sharply from 5.1 million in 1999 to 609,000 in 2024, an 88% drop that coincided with widespread job cuts.

Mobile and fixed-wireless services, on the other hand, do not require technicians to visit clients, reducing the need for thousands of Telkom technicians.

As a result, Telkom continued to downsize through voluntary retrenchment packages, early retirement offers, and other layoffs.

These measures helped the company become more sustainable, significantly boosting its revenue per employee—a key indicator of productivity and efficiency.

Over the past 25 years, Telkom has increased its revenue per employee from R376,000 to R4.4 million.