Telkom to target whites when slashing jobs

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A Telkom advert. Photo: Leon Nicholas.

Johannesburg - Telkom plans to target white, male employees when making job cuts that may affect more than 2,600 managers at South Africa’s largest fixed-line phone company, according to labor unions.

The carrier will consider “employment equity” when deciding who to dismiss, according to a document two labor unions said they received from Pretoria-based Telkom this week.

Employment equity is a government policy seeking to boost black participation in the workforce.

South African companies have to comply with legislation seeking to address racial inequalities that stem from apartheid rule, which ended in 1994.

White males account for almost 40 percent of the senior and middle management positions that Telkom wants to reduce, while less than 9 percent of South Africa’s population is white.

Solidarity, a union with close ties to the predominantly white Afrikaans community, said Telkom’s cuts may disproportionately target white workers.

“If I was a client I’d try and avoid this situation but I’m not sure that you can,” Joe Mothibi, a labor lawyer with Norton Rose Fulbright in Johannesburg, said by phone yesterday.

“Any discrimination by its nature is unfair, but the question is, is it legally unfair,” he said.

“It’s not unfair discrimination to pursue affirmative action measures.”

Affirmative action refers to measures that encourage companies in South Africa to hire and promote more black staff and procure more goods and services from black-owned companies.

Companies aren’t required to apply such policies when cutting jobs, though some have, Mothibi said.

 

‘Our Obligation’

 

Telkom said yesterday it intends to reduce its “management layer” by about 25 percent.

The operator, about 40 percent owned by the South African government, “will consider a number of criteria, one of which is our obligation to comply with the Employment Equity Act.”

The other criteria include qualifications, potential, length of service, and gender, according to a document that the unions, Solidarity and the South African Communications Union, said they received.

“This process is an imperative for the survival of the business into the future and its necessary success,” Telkom spokeswoman Sinah Phochana said in an e-mailed response to questions yesterday.

She declined to verify the document or answer questions on whether the company will make cuts based on race or gender.

Whites, who make up 8.7 percent of the population of 53 million, occupy 63 percent of top business management posts, the Employment Equity Commission said last year.

At Telkom, white males account for 38 percent of senior management and 39 percent of middle management, according to its 2013 annual report.

That’s higher than the proportion of black employees of any gender and white females.

 

Maseko’s Turnaround

 

“Preference will be given to designated groups to be retained,” Marius Croucamp, a spokesman for Solidarity, said in an interview May 12.

“This means that white managers will be retrenched because of their skin color.”

The phone company needs to reduce its approximately 19,200-strong workforce by almost a third over five years to remain financially viable, chief executive Sipho Maseko said in an interview in December.

The cuts may affect 2,635 management employees, according to the document dated May 12.

Telkom plans to cut costs by 5 billion rand by 2019 through staff reductions, it said last month.

Sales have fallen for three years and Telkom last year reported the biggest loss ever by a South Africa-based non-mining company.

 

‘Painful Truth’

 

“The painful truth is that if the current situation continues, even more damage may be caused to the company’s commercial viability which may be impossible to address in the near future,” according to the document.

Telkom shares have gained 41 percent this year, the fourth- best performer on the FTSE/JSE Africa All-Share Index.

They rose 1.7 percent to 39.40 rand at the close of trading in Johannesburg, valuing the company at 20.5 billion rand.

Maseko has said he has faced a staff backlash after hiring management consultants Bain & Co. to advise on a cost cutting plan he says is required to revive the company.

Maseko is facing referral to South Africa’s national prosecutor or a fine if he fails to attend a corporate governance course as ordered.

Telkom’s proposal to consider employment equity when making job cuts “is not novel,” Mothibi said.

“It’s not used that often but it’s not unheard of.” - Bloomberg News


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