SA Post Office plans another round of retrenchments to break its money-losing streak

The Post Office plans to lay off more employees as the state-owned postal company has been on a money-losing streak for 15 years and forced to operate without financial support from the government.

Retrenchments at the Post Office were always on the cards, but what remains unknown is just how many jobs the company plans to cut. 

The Post Office launched a two-phase approach to retrenchments aimed at reducing costs like the company’s salary bill, which accounts for 61% of its total expenditure. 

Phase one of the retrenchment process saw 668 job cuts in 2021, reducing the workforce from 15,826 to 14,460. (Beyond planned retrenchments, the Post Office’s workforce was also reduced through resignations, dismissals and the expiration of fixed-term contracts). 

The Post Office joined the ranks of other state-owned enterprises that cut jobs, including SAA, SA Express, Airports Company South Africa, Denel, SABC and Transnet. 

The Post Office is now pressing ahead with the second phase of retrenchments in which the company is aiming to slash at least 600 more jobs. 

But this number has been disputed by trade unions representing Post Office employees, saying the company plans to lay off as many as 6,000 employees – or 41% of its current workforce. 

The Communication Workers’ Union and trade union federation Cosatu believe that the Post Office plans to retrench thousands of employees, a view that could have been informed by the company’s three- to five-year turnaround plan. 

Various versions of the plan envisage the Post Office only needing up to 10,000 employees to run an efficient and modern company that offers more than traditional postal services, including online car licence renewal bookings and others. 

Postal companies around the world are struggling to reinvent their operations for a world in which consumers rely far more on electronic methods of communication than they do on mail. People are also opting for faster, more efficient parcel delivery services run by private sector companies. 

In South Africa, the Post Office is painfully aware of this major shift in consumer patterns, exacerbated by the company not being able to fulfil its basic function of delivering mail on time and to the right address. 

For instance, the Post Office’s mail delivery performance reached 75% in 2017. It has fallen to 68% in 2022. The Post Office has missed a self-imposed target of an 80% mail delivery performance for many years. 

National Treasury sees the Post Office operating with a staff count of 10,254 by 2024/25 as the declining nature of its operations requires fewer employees. 

Trade unions have interpreted Treasury’s projected reduction in the workforce as preparations for mass retrenchments.

However, a Post Office spokesperson said a formal retrenchment process has not yet started, and that the company is still consulting with trade unions, employees and the government (the Post Office’s sole shareholder). 

“The number of affected employees has not been determined yet. At the moment, it’s only the consultation process [that is under way]. The SA Post Office will not implement any steps affecting its workforce without following a proper consultation process with all parties,” the spokesperson told Business Maverick. 

Financial crisis