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State-run ports and logistics group seeks to avert strike threat by raising its wage offer to just above inflation over the next three years.
Transnet’s employee count has fallen to about 50 000 from a peak of 67 000 in 2015. Picture: Getty Images
Transnet and its two biggest trade unions are squaring up over demands for wage increases well above inflation over three years, along with a freeze in retrenchments.
The two largest unions – the SA Transport and Allied Workers Union (Satawu) and United National Transport Union (Untu) – have rejected state-run Transnet’s opening bid of CPI-linked increases, with Untu arguing that management rejected CPI-linked increases in 2022 when inflation hit 7.8%, but are in favour of it now that inflation is 3.2%.
In a statement on Wednesday, Transnet said it had tabled a revised three-year offer of CPI plus 1% (4.5%) in the first year, and CPI plus 0.5% (5% increase) in years two and three. The increase applies to salaries and related components such as 13th cheque, pension fund contributions, medical aid subsidies and housing allowances.
This is still well short of what the major trade unions have demanded.
Untu wants a 12% one-year increase, a R2 750 monthly housing allowance, a R2 950 medical aid allowance, no overtime limits and no retrenchments.
Satawu wants a 17.5% increase over three years and, like Untu, a freeze on retrenchments and improved medical aid subsidies.
The trade unions have yet to respond to Transnet’s latest offer.
Transnet says it considers its offer to be reasonable and fair “given the current financial and operational challenges and takes into consideration the cost of living, the wellbeing of employees, job security and the long-term sustainability of the organisation”.
“Critically, a three-year wage agreement provides a more stable and predictable environment for all parties involved.”
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Strategic priorities
The company says engagements with the trade unions are ongoing, and a speedy conclusion of negotiations will enable it to focus on its immediate strategic priorities of improving operational and financial performance, while positioning the organisation for future growth, thereby ensuring job security for current and future generations of South Africans.
Fixed labour makes up roughly two-thirds of Transnet’s operating costs, so a deal at anything close to what the unions are demanding threatens to derail the rail and port operator’s recovery.
The company has debt of about R137 billion, half of which was accumulated as a result of state capture. This debt is costing the company more than R1 billion a month.
Untu and Transnet agreed on a three-year wage increase in 2022, ranging from 5.5% to 6% for most workers, along with an increase in medical aid subsidies. That agreement comes to an end on 31 March 2025.
Satawu has threatened strike action unless an agreement is reached, but says this should be a last resort.
Transnet’s employee count has fallen to about 50 000 from a peak of 67 000 in 2015.
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Transnet turnaround
After reporting a loss of R5.7 billion in 2023, the company is targeting a return to profits in 2025 by cutting debt and improving operational performance.
There are signs of recovery in rail volumes, which had deteriorated to post-World War 2 levels.
Rail volumes appear to have stabilised at about 152 million tonnes (Mt) in 2024, just shy of the 154Mt target.
Rail generates 43% of group revenue, but volumes are down by a third since 2018.
The company has asked National Treasury for a R100 billion bailout, and received a R47 billion guarantee facility in 2023 to help meet its immediate debt obligations.
It has burned through more than half of this, says DA finance spokesperson Mark Burke, and will soon be back with even more demands.
It also wants government to assume R61 billion of its debt, though this is becoming a tough sell given the difficulty of balancing the budget amid several competing demands.
Finance Minister Enoch Godongwana was expected to make an announcement on what assistance would be extended to Transnet in the 2025 Budget speech, but that speech was called off last month when the DA refused to support a two percentage point Vat increase.
What’s needed, says Burke, is a full asset, process flow and portfolio analysis to better understand how to split it up. The next money into Transnet will have to come from the private sector.
This article was republished from Moneyweb. Read the original here.
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