If the scenes on national television were to be believed, the unions won a crushing victory over the employer, SAA, when the week-long strike came to an end on Friday.
“We have won! Eight percent and no retrenchments!” screamed Numsa spokesperson, Phakamile Hlubi Majola, fist-pumping in exultation, to the approving roar of the crowd.
But what, if anything, have the unions won?
Digging into the agreement signed on Friday by the protagonists, paints a very different picture to the one suggested by Ms Hlubi Majola.
The catalyst for the strike action, SAA’s announcement of a Labour Relations Act Section 189A process, came during the annual wage negotiation, prompted by the SSA board’s understanding, that with the carrier being technically insolvent, drastic action was needed to stem the haemorrhaging of R450 million a month.
SAA had already rejected the unions’ demand for an 8% increase, putting 5.9% on the table as a final offer.
All that happened in the Friday agreement was acceptance of the 5.9% increase, backdated to April this year. The caveats, however, suggests that the unions are actually worse off.
The backpay will be effected in three tranches, in the February, March and April payrolls.
But the sting in the tail, now part of the formal CCMA brokered deal, makes all of these payments “subject to availability of funding”.
Government has made it clear that it will not be handing SAA another bailout, so it must go to the markets for any funding that it seeks.
The ink was barely dry on the agreement when the carrier’s chief technical officer, Phillip Saunders, breathlessly announced that reaching agreement was “a turning point” and that he believed it would be possible to “turn SAA around”.
When asked about where the money would come from, considering that SAA is insolvent, he unctuously announced that “Government and the banks I’ve presented to were very positive”.
What he failed to mention is that in order for SAA to acquire any form of loan, government, as the sole shareholder would have to stand guarantor, and if Public Enterprises Minister Pravin Gordhan and Finance Minister Tito Mboweni’s recent pronouncements are anything to go by, that just ain’t going to happen any time soon.
Since government is saying “no”, to either a bailout or a guarantee, what financial institution in its right mind, would lend SAA a red cent?
That SAA reiterated on Monday that the 5.9% could not be paid unless it could find the money, comes as no surprise.
As an aside, the unions’ bleat that “two days of SAA’s losses during the strike would pay for our demanded increase” is so much nonsense. As aviation expert, Guy Leach, pointed out, the alleged R50 million per day, was actually an estimate of revenue that SAA lost due to grounded flights. If planes do not fly, no expense is incurred, and with striking staff not being paid, and no fuel being burned (the single greatest cost component of any flight) SAA’s actual losses would have been negligible.
In essence, SAA would have bled significantly less cash during the eight days of the strike than it has in the past, which, considering its precarious financial position, might have been a blessing in disguise.
The agreement also contemplates the establishment of a task team, which will “identify and consider cost-saving initiatives, inter alia, insourcing and contracts. Should the task team be able to realise savings, a percentage of the after-tax savings may be ring-fenced and paid to employees in the bargaining unit.” It is worth noting the words “a percentage” and “may” in this clause, neither of which promises the extent of cash needed to pay the agreed upon 5.9%, or, for that matter, the demanded 8%, which the unions seem to think will be the case.
The Section 189A process that triggered the strike action, “… for which notice was served on November 11 2019 to all recognised trade unions, will be deferred effective from the date of signature of this agreement to January 31 2020. The deferment will only apply to this bargaining unit (non-management)”.
How this can be viewed as a victory, beggars belief. Deferment does not mean retraction.
SAA announced on Monday that the Section 189A process for management positions – an undisclosed proportion of the 944 notices served – would proceed under stewardship of the Commission for Concilliation, Mediation and Arbitration.
The savings estimated from the planned retrenchments, at an average annual cost to company of R540 000, amounts to about R309 million.
Avoiding the retrenchments is not contingent upon SAA raising further loans or getting a bailout from government. It is contingent upon SAA turning a profit of sufficient magnitude to offset the cost of retaining the staff, over whose heads hang the retrenchment sword of Damocles.
The carrier hasn’t made a profit since the 2010/2011 financial year, so how the unions expect this to be miraculously turned around in the next 10 weeks, is a complete mystery.
Aside from the fact that all SAA’s staff will enjoy a stress-free festive season, nothing else is resolved.
SAA continues to bleed cash, and, save further fruitless strike action, the unions have no tools left in the shed once February 1 arrives, and the balance of the Section 189A processes get under way.
