‘Bankrupt’ SA Post Office’s drive to cut costs

With the South African Post Office (Sapo) proposing major salary cuts, experts are saying the entity is bordering on bankruptcy and will “eventually die”.

In an attempt to reduce staff costs, Sapo confirmed it was considering strategies to drop its “unsustainable” staff bill, which currently accounted for 68% of its expenditure.

Chief economist at Efficient Group Dawie Roodt said the entity was completely bankrupt, with too many people working and cost too much without delivering efficient service.

Roodt said with the deplorable leadership, everything was collapsing.

“It has been in the process of imploding for some time,” he said.

Roodt said this reflected what also happened to other state-owned enterprises. The private sector had to take over much of what were the functions of the post office.

Chopping the salary bill

The SA Post Office would possibly eliminate 40% of staff salaries through a reduced work week programme and, according to its communications manager, Johan Kruger, considerations also included a voluntary severance package process.

“These measures are aimed at cutting employment costs, while saving some jobs – effectively a job-sharing model; while at the same time delaying a process of forced retrenchments,” Kruger said.

Roodt said this would not be easy, as trade unions would not accept this.

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He said the situation was a real political dilemma. “If you want to save something like this [Sapo], you have to put it into business rescue and accept that people might lose their jobs and these other political objectives are not financially viable. The cadre deployment needs to stop.

“This [the business of a postal service] needs to be run on a commercial basis, but politicians would not take that step and the inevitable would be that it would slowly die just like the other entities.”

To save such ailing enterprises the private sector would need to take them over “and that is the silver lining for SA”, said Roodt.

Relics of State Capture

Political analyst Ntsikelelo Breakfast said SA still experienced the remnants of state capture because state entities like Sapo had been targeted.

“The past was still with us and we saw how people used them in pursuit of personal accumulation to gain wealth,” he said.

Breakfast said it would take time to turn the tide in terms of making sure issues were fixed and they were up and running.

“The Passenger Rail Agency of South Africa (Prasa) is falling apart, Eskom is in shambles, the SABC also has financial problems, so this just shows corruption is not just a buzz word but is embedded,” he said.

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While taxpayers’ monies continue to go down the drain, the question remained whether it was worth keeping Sapo open.

Breakfast said the truth was the ANC believed in a developmental state.

He said the party looked up to the Asian tigers such as China, Japan, Taiwan, and those countries who grew their economies at a faster pace and utilised state organs to drive economic growth and development.

“The ANC believes they cannot do away with those state entities but the problem is the institutionalisation of corruption. And the people deployed to those institutions are not up to scratch,” he said.

“I am not against deployment but when one deploys, it should be strategic. The ANC makes a mockery of cadre deployment, which has led us to where we are today. The national development plan talks about a capable developmental state, but without a good bureaucracy it will not take off,” Breakfast said.

Crumbling entity

Calling Sapo out as a “crumbling entity”, the Democratic Alliance’s shadow minister of communications, Dianne Kohler Barnard, said the reduction in work would only worsen service delivery at the Sapo.

“Permanent staff numbers have reduced from 15 826 to 14 460 and employee satisfaction level stands at a disappointing 42%,” she said.

“Sapo had become one of the biggest failed SOEs and the taxpayer has now been wasting money on this corrupt and incapable SOE for almost 20 years,” Barnard said.

But Group CEO of Sapo Nomkhita Mona said any self-respecting strategic leader would know “doing nothing and putting your head in the sand” was not a viable strategy and, equally, sitting by and expecting the government to bail the entity out, was not a viable strategy either.

“For one, it wastes public funds – which could be well utilised in more pressing areas, but at the same time it is generally throwing good money after bad,” she said.

“There is a definite case to be made for some government support for Sapo at this point (due partly to the social mandate the SA Post Office carries), as well as the fact that it has been ‘allowed’ to [deteriorate] this far.”

“My goal is to reiterate the values of the Post Office,” Mona said, “so that you will discover the contemporary benefits that we have produced – simply through the blend of deliberate and emergent strategy.”

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